LKQ Corporation: North America Improved, But Europe Is Still A Drag

Redfox Capital Ideas 776 Followers Follow Summary LKQ Corporation remains a hold as North America shows organic growth, but European operations are hampered by ERP disruptions and lost wallet share. Q2 revenue declined 6% year-over-year to $3.4B, with consolidated EBITDA margin down 160 bps to 10.2% and adj. EPS falling to $0.67. North America achieved its first positive organic growth in nine quarters, driven by increased alternative parts adoption and stable aftermarket demand. Europe's ERP issues led to ~$140M in revenue and ~$50M in EBITDA drag; valuation at 8x NTM P/E reflects market skepticism pending tangible operational recovery. Luis Alvarez/DigitalVision via Getty Images Investment summary My previous investment thought on LKQ Corporation ( LKQ ) was a hold rating because I saw no strong catalyst that would result in multiples getting re-rated upwards. The current setup is better than This article was written by Redfox Capital Ideas 776 Followers Follow I focus on long-term investments while incorporating short-term shorts to uncover alpha opportunities. My investment approach revolves around bottom-up analysis, delving into the fundamental strengths and weaknesses of individual companies. My investment duration is the medium to long-term. Ultimately, I aim to identify companies with solid fundamentals, sustainable competitive advantages, and growth potential. Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.