Lithia Motors (LAD) is back in focus after Lithia & Driveway moved up to No. 123 on the 2026 Fortune 500 list, now the highest ranked automotive retailer by revenue.

The recent Fortune 500 recognition comes as the stock posts a 19.65% 1 month share price return and a 24.14% 3 month share price return, even though the year to date share price return is down 5.69% and the 1 year total shareholder return is down 2.49%. The 3 year total shareholder return is 17.86%, suggesting recent momentum has picked up after a softer stretch.

If this kind of re rating story has your attention, it can be a useful moment to broaden your watchlist and check out 20 top founder-led companies

With the stock trading at $313.38 and some estimates implying meaningful upside, yet recent returns still mixed, the key question now is simple: Is Lithia Motors still undervalued, or is the market already pricing in future growth?

Most Popular Narrative: 15.7% Undervalued

With Lithia Motors last closing at $313.38 versus a narrative fair value of about $371.73, the current setup frames a clear valuation gap investors are watching closely.

Sustained strength and growth in aftersales (service, parts, warranty) driven by the aging U.S. vehicle fleet and longer replacement cycles is boosting high margin, recurring revenue streams, over 60% of Lithia's net profit now comes from aftersales, providing stability and earnings growth not reflected in current valuations.

Curious what has to happen for that higher value to hold up? The narrative leans on measured revenue growth, modest margin improvement, and a future earnings multiple below many peers. The key question is how those moving pieces combine to justify a higher price without stretching assumptions.

Result: Fair Value of $371.73 (UNDERVALUED)

However, the story can change quickly if acquisition returns weaken or digital rivals gain ground. This could pressure margins and challenge the current valuation gap.

Next Steps

With both risks and rewards in play, this is the moment to look through the numbers yourself and decide whether the narrative really holds. To get a balanced view of what could go right and what might go wrong for this stock, take a closer look at the 3 key rewards and 1 important warning sign

Looking for more investment ideas?

If Lithia Motors has sharpened your interest, do not stop here. Broaden your watchlist now so you are not late to the next story.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.