Why Is Group 1 Automotive (GPI) Up 0.4% Since Last Earnings Report?

It has been about a month since the last earnings report for Group 1 Automotive (GPI). Shares have added about 0.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Group 1 Automotive due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Group 1’s Q1 Profit & Sales Top Mark, Rise Y/Y

Group 1 reported first-quarter 2022 adjusted earnings per share of $10.81, beating the Zacks Consensus Estimate of $9.45. The outperformance can be attributed to the higher-than-anticipated sales from the company’s new-vehicle retail, used-vehicle retail and Finance and Insurance segments. The bottom line increased from the prior-year quarter’s $5.57 per share, marking growth of 94.1%.

The automotive retailer registered net sales of $3,844.4 million, beating the Zacks Consensus Estimate of $3,767.2 million. Also, the top line rose 27.7% from the year-ago quarter’s $3,010 million.

Quarter Highlights

New-vehicle retail sales increased 15.6% from the prior-year quarter’s levels to $1,745.1 million. The figure topped the Zacks Consensus Estimate of $1.718 million. The gross profit from the unit totaled $201.3 million, soaring 110.4% year over year. The reported profit figure also surpassed the consensus mark of $191 million.

Used-vehicle retail sales rose 53.1% from the year-ago period to $1,359.9 million. The sales figure also outpaced the consensus mark of $1.220 million. The gross profit from the unit summed $87.8 million, jumping 50.2% year over year. The reported profit figure, however, missed the consensus mark of $95 million.

Used-vehicle wholesale sales climbed 19.5% from the corresponding quarter last year to $93.5 million but missed the consensus mark of $96 million. The gross profit from used-vehicle wholesale sales fell to $2.8 million from $3.8 million reported in the year-ago period. The reported figure missed the consensus mark of $4.73 million.

In the Parts and Service business, the top line rose 34% from the year-ago quarter’s to $472.9 million. The revenue figure lagged the Zacks Consensus Estimate of $566 million. The gross profit for the segment summed $259.8 million, climbing 31.4% year on year but missing the consensus mark of $304 million.

Revenues from the Finance and Insurance business improved 37.7% from the prior-year period’s levels to $173 million, topping the consensus mark of $140 million. The profit for the segment was break-even.

Segments in Detail

In the reported quarter, revenues in the US business segment climbed 28.6% year over year to $3,091.3 million. The segment’s gross profit surged 49.5% to $620.9 million. During the reported quarter, the retail new-vehicle, retail used-vehicle and wholesale used-vehicle units sold were 29,498, 33,940 and 6,001, respectively.

In the reported period, revenues jumped 37% year over year to $753 million for the UK business segment. Also, the gross profit summed $103.8 million, up 57.3% from the year-ago quarter. During the reported quarter, the retail new-vehicle, retail used-vehicle, and wholesale used-vehicle units sold were 7,235, 9,866 and 3,098, respectively.

Financial Position

Group 1 Automotive had cash and cash equivalents of $16.6 million as of Mar 31, 2022, down from $14.9 million in the corresponding period of 2021. Total debt was $1,988.7 million as of Mar 31, 2022, down from the $2,035.7 million recorded on Dec 31 , 2021.

During the current quarter, GPI repurchased 638,696 shares at an average price of $180.3 per common share for a total of $115.2 million. As of Mar 31, 2022, the company had 16.7 million common shares outstanding.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

The consensus estimate has shifted 5.73% due to these changes.

VGM Scores

Currently, Group 1 Automotive has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren’t focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Group 1 Automotive has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Group 1 Automotive is part of the Zacks Automotive – Retail and Whole Sales industry. Over the past month, Lithia Motors (LAD), a stock from the same industry, has gained 5.5%. The company reported its results for the quarter ended March 2022 more than a month ago.

Lithia Motors reported revenues of $6.71 billion in the last reported quarter, representing a year-over-year change of +54.4%. EPS of $11.96 for the same period compares with $5.89 a year ago.

Lithia Motors is expected to post earnings of $11.85 per share for the current quarter, representing a year-over-year change of +6.6%. Over the last 30 days, the Zacks Consensus Estimate has changed +11.4%.

Lithia Motors has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.

This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>

Click to get this free report

Group 1 Automotive, Inc. (GPI): Free Stock Analysis Report

Lithia Motors, Inc. (LAD): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Leave a Reply

Your email address will not be published.