Auto parts provider LKQ (LKQ, Buy) posted solid results for its second quarter. The earnings of $0.35 per share were almost $0.02 ahead of consensus expectations. The 37 percent rise in revenue was initially because of the Keystone Automotive purchase and accumulative revenue from rest tiny bought businesses, totaling 30 percentage points of the rise. We have raised price target for LKQ shares to $41 from $38 while reiterated ‘Buy’ rating.
LKQ has matured to current level faster since its 1998 inception via various acquisitions and rising market penetration. In our view, the firm manages enough liquidity at nearly $1.2 billion to nourish its strong hunger for acquisitions. Company is also trying for non-domestic acquisitions which include “Sator” in Europe. The firm is the prominent supplier of recycled and after-market auto parts to crashed-repair body shops, over and above just machine repair shops.