Description
Recycles end-of-life vehicles; refurbishes engines/transmissions; keeps materials out of landfills; leading global auto recycler.
Created
Mar 26, 2025 6:36 PM
URL
Circular Economy Involvement
Company Name
LKQ Corporation
Cover Image
Industry/Subsector
Automotive Parts – Salvage & Refurbished Parts Distribution
Investment Thesis
Growing demand for recycled auto parts; resilient across cycles; consolidated a fragmented industry; strong distribution network.
Market CapitalizationMarket Capitalization
Multi-selectMarket Capitalization
~$10–11 billion
Recent Financial Performance
~$14.4B revenue, ~$690M net income, ~5% net margin, ROE ~12%, debt/equity ~0.9
Stock
Ticker
LKQ
- Industry/Subsector: Automotive Parts – Salvage & Refurbished Parts Distribution
- Market Capitalization: ~$10–11 billion
- Circular Economy Involvement: LKQ is a global leader in automotive recycling and refurbishment. The company acquires end-of-life and damaged vehicles, salvages usable components, remanufactures parts like engines and transmissions, and sells them as affordable replacements. This model extends the life of auto parts and keeps materials out of landfills. LKQ’s founders recognized early “a need to keep end-of-life vehicles out of landfills” and developed a **sustainable business salvaging and remanufacturing automotive parts, recovering fluids and recycling materials – creating a pathway to circularity. Today, LKQ’s operations include recycled OEM parts, aftermarket parts, and scrap metal recycling from vehicles, making it a key enabler of a circular economy in the automotive sector.
- Recent Financial Performance: In 2024, LKQ delivered $14.4 billion in revenue (up 3.5%), driven by growth in its North American and European segments. Net income was $690 million, down from the prior year due to some margin pressures – reflecting a net profit margin around 5%. ROE is in the low-to-mid teens (12% trailing). While 2024 profits dipped (partly on softer scrap prices and inflation in costs), the company has a history of steady growth by acquisition and cost control. Debt is moderate (debt/equity ~0.9) and manageable with strong cash flows.
- Investment Thesis: LKQ taps into the growing demand for recycled and cost-effective auto parts, benefiting from trends in sustainability and vehicle repair affordability. It operates an extensive distribution network and has consolidated a once-fragmented industry, giving it scale advantages. Long-term, increasing vehicle complexity (e.g. more electronic components) and focus on recycling will drive demand for LKQ’s salvaged and remanufactured parts. The company has proven resilient across economic cycles – when new car sales dip, consumers and insurers turn to repairs, bolstering LKQ’s business. With expansion into related areas (like recycling hybrid/EV batteries through recent acquisitions) and consistent free cash generation, LKQ offers a compelling circular economy play with solid fundamentals. Its reasonable valuation (forward P/E in the low teens) and shareholder-friendly capital allocation (dividends and buybacks) add to the long-term investment appeal