LKQ Corporation (LKQ): fair value, margin of safety and Wheel Score

Is LKQ undervalued?

LKQ Corporation (LKQ) closed at 22.36 on 16 Oct 2026. The GLS average fair value - the simple average of the 9 valuation models that produced a positive number - is 35.96, which puts the price 38% below it. 5 of the 9 models value the shares above the current price. A gap this wide is rare in our universe of ~7,400 US stocks and is exactly what the Value part of the Wheel Score rewards; it is also where the question "why is it this cheap?" matters most.

The 9 models disagree widely: GLS Growth gives 2.28 while DCF gives 73.89. A spread that wide means the average is sensitive to which methods you trust; the model table below shows where each one lands, and the Quote page lets you switch any of them off.

The nightly engine files LKQ under High Yield Income: a dividend yield above 4%.

Nine valuation models for LKQ

Each model turns the latest filed numbers into a value per share; the GLS fair value is the simple average of the ones that produce a positive number. The last two rows are shown for reference and never enter the average. The Quote page lets you switch any model off and add your own margin of safety.

Quality and financial health

Financial health is average - LKQ passes 5 of the nine Piotroski tests, which falls one point short of the Sunday Scan's "6 or more" rule. The Financials tab on the Quote page shows which tests fail. The GLS Moat score is low at 4.9 out of 10, which says the ten-year record of revenue, earnings, margins and returns on capital has been inconsistent - growth and shocks rather than steady compounding.

Returns on capital are moderate - ROIC 5.2%, ROE 9.3%, ROA 4.0% - with debt at 0.77 times equity and a free-cash-flow yield of 11.0%.

The dividend yield is high at 5.37% (payout ratio 67%). A yield this size is often the market's way of pricing a risk to the payout, so the health score and cash flow matter more than usual. Revenue comes mainly from Europe 75%, Specialty 25% (quarter Q2 FY2026).

Institutional ownership scores 10/10, insider activity 5/10 and Congressional trading 5/10 on the GLS smart-money scales.

Wheel Score 82: Prime

LKQ scores 82 out of 100 on the Wheel Score, in the Prime band (80 and above), which fewer than one stock in twenty reaches on any night. The score blends five things a wheel trader checks before selling a cash-secured put: the margin of safety (Value, 25/25), Piotroski health (11/20), the GLS moat (7/15), the option premium on offer (20/20) and how easily the stock trades (19/20).

Implied volatility is 50% on the near-the-money contracts 20-60 days out - inside the 35-60% range the Wheel Score pays full marks for: enough premium to be worth selling, not so much that the risk is unpaid. Chain open interest is 41,112 contracts across all expiries - enough for the wheel at normal size.

Volume runs at 3.8M shares a day on a market cap of $5.7B, with a beta of 0.86; the Stability part of the Wheel Score gives that 19 of 20.

The Wheel Score ranks ~7,400 US stocks for selling cash-secured puts and covered calls; it is updated nightly and is not a recommendation. The walkthrough lesson shows how the score fits into a trade, start to finish.

Upcoming events

LKQ Corporation reports earnings on 29 Oct 2026 (before the open) - inside the 14-day window the Sunday Scan avoids, because a put sold now would carry the report's gap risk.

Earnings, dividend, IPO, split and economic calendars for the whole market, filterable to your watchlists.

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