Lkq CorpLKQ

LKQ Corporation is a company that's still very much in the business of selling recycled car parts, with $3.47B in revenues and $79.0M in net income, which is all well and good, but one can't help but wonder what the board is doing with all that cash.

The company's latest financials reveal a respectable operating income of $217.0M, but net cash provided by operating activities is a less-than-respectable $-56.0M, leaving one to ponder the wisdom of executive incentives.

LKQ's inventory build is a notable $3.35B, and a decrease in inventories of $-42.0M, which raises questions about the company's ability to manage its stock levels, and whether the board is more focused on buying back shares than actually running the business.

The company's recent 8-K filing reveals a company that's trying to navigate the complex world of vehicle diagnostic services, with the company's Elitek Vehicle Services being a leader in this field, but one can't help but wonder if the company's focus on this area is a distraction from its core business of selling recycled car parts.

What changed is the company's focus on vehicle diagnostic services, and what remains unproven is the company's ability to generate cash and reward its shareholders, especially when one considers the company's earnings per share of $2.35, and the weighted average number of shares outstanding of 255.9M.