Lithia & Driveway Q2 2026: Record Revenue, EPS Growth, and 23% Dividend Hike

Record Revenue and Earnings Growth

Lithia & Driveway (NYSE: LAD) posted record second-quarter 2026 revenue of $9.8 billion, a 2% increase year-over-year. Diluted earnings per share rose 17% to $11.54, while adjusted diluted EPS climbed 9% to $10.03. The company attributed the gains to improved profitability in its used vehicle segment, where retail gross profit per unit (GPU) increased 20% sequentially. Financing operations also hit a record, generating $37 million in income with strong origination volumes.

Shareholder Returns: Buybacks and Dividend Increase

During the quarter, Lithia repurchased $242 million of its common stock, representing 3.7% of outstanding shares. For the first six months of 2026, total share repurchases reached $534 million. The board approved a 23% increase in the quarterly dividend to $0.70 per share, payable on August 21, 2026. The dividend hike reflects management's confidence in the company's financial health and cash flow generation.

Profitability Metrics and Segment Performance

Gross margin for Q2 2026 was 59.2%, a 120-basis-point improvement on a same-store basis. However, adjusted net income for the quarter declined 6% compared to Q2 2025, and diluted EPS for the first six months of 2026 fell 12% year-over-year, indicating some pressure on core profitability. The used vehicle segment's GPU improvement was a bright spot, while financing income reached a record $37 million.

What it means for income investors

The 23% dividend increase signals management's commitment to returning capital to shareholders, supported by record revenue and strong cash flow. However, the decline in adjusted net income and six-month EPS warrants monitoring for sustained earnings growth to support future payout increases.

Reporting based on: Quiver Quantitative. Figures verified against market data where available.