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ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Lithia Motors's annualized return on capital (ROC %) for the quarter that ended in Jun. 2026 was 4.85%.
As of today (2026-08-03), Lithia Motors's WACC % is 7.85%. Lithia Motors's ROC % is 4.43% (calculated using TTM income statement data).
Lithia Motors earns returns that do not match up to its cost of capital. It will destroy value as it grows.
ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Lithia Motors's WACC % is 7.85%. Lithia Motors's ROC % is 4.43% (calculated using TTM income statement data).
Lithia Motors earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Be Aware
Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Lithia Motors ROC % Related Terms
Lithia Motors ROC % Historical Data
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The historical data trend for Lithia Motors's ROC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Note:
The Operating Income data used here is four times the quarterly (Jun. 2026) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Lithia Motors (LAD) has a ROC % of 4.85% as of Jun. 2026. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Lithia Motors and its competitors.
Is Lithia Motors' ROC % too high?
Lithia Motors' current ROC % is 4.85%. The Vehicles & Parts industry median ROC % is 5.05. Lithia Motors' value of 4.85% is 4% below this industry median. Overall, Lithia Motors has a GF Score™ of 90/100 and is considered Fairly Valued, reflecting its overall financial health beyond just this single metric.
How does Lithia Motors' ROC % compare to ALTB and KMX?
Lithia Motors' ROC % of 4.85% can be compared against companies in the Vehicles & Parts industry. The industry median ROC % is 5.05. Lithia Motors' value of 4.85% is 4% below this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROC % for a Vehicles & Parts company?
The median ROC % among Vehicles & Parts companies is 5.05, based on 1,309 companies in the industry. Companies in the top quartile (top 25%) have a ROC % significantly above this median, while those in the bottom quartile fall well below. However, ROC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Lithia Motors's current ROC % of 4.85% is 4% below the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROC % mean?
A high ROC % can signal that a stock is expensive relative to its fundamentals. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Lithia Motors and its competitors. For the Vehicles & Parts industry, the median ROC % is 5.05 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Lithia Motors's current ROC % is 4.85%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Lithia Motors stock overvalued right now?
Based on GuruFocus' analysis, Lithia Motors (LAD) is currently considered Fairly Valued. The stock's GF Value™ is $380.88, compared to a current price of $385.42 — trading 1.2% above its estimated fair value. The current ROC % is 4.85% and 4% below the Vehicles & Parts industry median of 5.05. Lithia Motors' overall GF Score™ is 90/100 with 13 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROC % calculated?
ROC % is calculated from a company's financial statements. For Lithia Motors (LAD), the current ROC % is 4.85% as of Jun. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Lithia Motors (LAD) Overvalued in 2026?
Based on GuruFocus' analysis, Lithia Motors stock appears to be overvalued.
The current stock price of $385.42 is trading 1.2% above its estimated GF Value™ of $380.88.
GuruFocus considers Lithia Motors to be Fairly Valued.
Key valuation signals for LAD:
ROC %: 4.85%
GF Value™: $380.88 vs. price of $385.42 (1.2% above fair value)
Industry Position: 4% below the Vehicles & Parts median
No single metric tells the full story. See the LAD stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Lithia Motors is a retailer of new and used vehicles and related services. The company offers nearly 60 brands of vehicles at nearly 500 stores globally across the US, Canada, and UK. The company has expanded largely through the acquisition of dealerships in smaller regional markets but now seeks to grow in any part of the US and we expect more deals over time in the US and, at times, abroad. Annual revenue in 2025 was $37.6 billion and we see over $50 billion possible in a few years. The US was 78.5% of 2025 revenue and the UK second at 18.4%, due to the 2024 Pendragon acquisition. In 2025, new vehicle sales were about 50% of total revenue. Lithia was founded in 1946, went public in 1996, and is the largest US auto dealer. It is based in Medford, Oregon.
90GF Score
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