What Happened?
Shares of automotive parts company LKQ (NASDAQ: LKQ) fell 21% in the afternoon session after the company reported disappointing second-quarter 2025 results and lowered its full-year financial outlook. The company's adjusted earnings per share (EPS) fell short of analyst expectations, coming in at $0.87 versus an anticipated $0.92. Revenue declined 1.9% year-over-year to $3.6 billion. Compounding the issue, LKQ lowered its full-year 2025 guidance, projecting a decline in organic revenue and cutting its adjusted EPS forecast to a range of $3.00 to $3.30, down from a prior estimate of $3.40 to $3.70. Management pointed to several challenges, including a delayed recovery in repairable claims in North America, the impact of tariffs, and soft market conditions in both North America and Europe, which contributed to the weaker performance and outlook.
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What Is The Market Telling Us
LKQ’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. Moves this big are rare for LKQ and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock dropped 15.2% on the news that the company reported second-quarter earnings, with its revenue, organic revenue, and EPS falling short of Wall Street's estimates.
On top of that, it significantly lowered its full-year organic revenue and EPS guidance. The company attributed the weakness to "lower repairable claims in North America and difficult macroeconomic conditions in Europe." While the headwinds are considered temporary, they are expected to persist till the end of the year, potentially dampening the market's optimism towards the stock, at least in the near term. Overall, this quarter could have been better.
LKQ is down 16.4% since the beginning of the year, and at $30.30 per share, it is trading 31.9% below its 52-week high of $44.48 from July 2024. Investors who bought $1,000 worth of LKQ’s shares 5 years ago would now be looking at an investment worth $1,084.
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