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Group 1 Automotive (GPI)
NYSE:GPI
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Group 1 Automotive
(NYSE:GPI)74Outperform
Positive Factors
Market Position
GPI is viewed as a best in class operator poised for continued market share growth with efficient capital allocation via strategic mergers and acquisitions and share buybacks providing further upside.
Sales Performance
GPI's performance was stronger than anticipated, driven by higher new units and GPUs in the US and stronger new and used units and GPUs in the UK.
Negative Factors
Cost Management
Adjusted SG&A as a % of gross profit of 70.1% was worse than the 67.7% estimate, and increased 360bps YoY.
Group 1 Automotive (GPI) vs. S&P 500 (SPY)
Market Cap
$5.83B
Dividend Yield0.42%
Average Volume (3M)150.57K
Price to Earnings (P/E)12.0
Beta (1Y)0.98
Revenue Growth11.53%
EPS Growth-13.75%
CountryUS
Employees20,413
SectorConsumer Cyclical
Sector Strength53
IndustryVehicles
Share Statistics
EPS (TTM)36.66
Shares Outstanding13,244,315
10 Day Avg. Volume161,542
30 Day Avg. Volume150,570
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.30
Price to Cash Flow (P/CF)7.00
P/FCF Ratio11.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$425.97Price Target Upside-4.30% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Group 1 Automotive Business Overview & Revenue Model
Company DescriptionGroup 1 Automotive, Inc. engages in the automotive retailing industry. It operates through the following geographical segments: U.S, the UK, and Brazil. It also sells new and used cars and light trucks, arranges related vehicle financing, sells service contracts, provides automotive maintenance and repair services, and sells vehicle parts. The company was founded in 1995 and is headquartered in Houston, TX.
How the Company Makes MoneyGroup 1 Automotive generates revenue primarily through the sale of new and used vehicles, which constitutes a significant portion of its income. The company also earns money from its parts and service departments, which provide vehicle repairs, maintenance, and the sale of automotive parts. Additionally, Group 1 Automotive derives income from finance and insurance products, including arranging third-party vehicle financing and offering extended service contracts and insurance products to customers. The company's strategic partnerships with major automotive manufacturers and financial institutions enhance its ability to offer a comprehensive suite of products and services, thereby contributing to its overall earnings.
Group 1 Automotive Financial Statement Overview
Summary
Group 1 Automotive shows strong revenue growth and enhanced cash flow capabilities. However, the decrease in net profit margin and increased leverage raise concerns about profitability efficiency and financial stability.Income Statement
Group 1 Automotive demonstrates strong revenue growth with a 11.55% increase from 2023 to 2024, indicating a positive sales trajectory. However, the net profit margin decreased to 2.50% in 2024 from 3.37% in 2023, suggesting a decline in profitability efficiency. The gross profit margin remains stable at around 16.26%, and the EBIT margin is consistent at 4.56%, reflecting stable operational efficiency.75
Positive
Balance Sheet
The company's debt-to-equity ratio increased to 1.76 in 2024 from 1.46 in 2023, indicating higher leverage which may pose financial stability risks. The return on equity decreased to 16.75% in 2024 from 22.49% in 2023, reflecting reduced profitability. The equity ratio slightly improved to 30.27% in 2024, showing a modest increase in financial stability.68
Positive
Cash Flow
Operating cash flow increased significantly to $586.3 million in 2024, demonstrating enhanced cash generation capabilities. The free cash flow grew substantially to $341.2 million, indicating improved liquidity and financial flexibility. The operating cash flow to net income ratio improved, suggesting better cash flow management.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 19.93B | 17.87B | 16.22B | 13.48B | 10.85B | Gross Profit |
| 3.24B | 3.02B | 2.97B | 2.44B | 1.77B | EBIT |
| 909.10M | 968.60M | 1.09B | 884.40M | 486.10M | EBITDA |
| 1.02B | 1.06B | 1.21B | 963.40M | 568.70M | Net Income Common Stockholders |
| 498.10M | 601.60M | 751.50M | 552.10M | 286.50M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 34.40M | 57.20M | 47.90M | 14.90M | 87.30M | Total Assets |
| 9.82B | 7.77B | 6.72B | 5.75B | 5.09B | Total Debt |
| 5.24B | 3.89B | 3.35B | 2.85B | 2.68B | Net Debt |
| 5.20B | 3.84B | 3.30B | 2.83B | 2.59B | Total Liabilities |
| 6.85B | 5.10B | 4.48B | 3.92B | 3.64B | Stockholders Equity |
| 2.97B | 2.67B | 2.24B | 1.83B | 1.45B |
| Cash Flow | Free Cash Flow | |||
| 341.20M | 4.80M | 430.40M | 1.12B | 702.20M | Operating Cash Flow |
| 586.30M | 190.20M | 585.90M | 1.26B | 805.40M | Investing Cash Flow |
| -1.28B | -366.10M | -484.60M | -1.25B | -74.70M | Financing Cash Flow |
| 681.10M | 185.20M | -67.30M | -74.00M | -668.10M |
Group 1 Automotive Technical Analysis
Neutral
445.13
Price Trends
445.67
Negative
419.28
Positive
375.75
Positive
Market Momentum
0.37
Positive
40.33
Neutral
20.80
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GPI, the sentiment is Neutral. The current price of 445.13 is below the 20-day moving average (MA) of 463.92, below the 50-day MA of 445.67, and above the 200-day MA of 375.75, indicating a neutral trend. The MACD of 0.37 indicates Positive momentum. The RSI at 40.33 is Neutral, neither overbought nor oversold. The STOCH value of 20.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GPI.
Group 1 Automotive Risk Analysis
Group 1 Automotive disclosed 22 risk factors in its most recent earnings report. Group 1 Automotive reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Group 1 Automotive Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $10.93B | 11.92 | 17.64% | 2.65% | 3.14% | -11.22% | |
74 Outperform | $5.83B | 11.97 | 16.75% | 0.42% | 11.53% | -13.75% | |
73 Outperform | $8.36B | 10.75 | 12.05% | 0.64% | 16.75% | -18.09% | |
72 Outperform | $5.02B | 11.87 | 12.29% | ― | 16.11% | -24.72% | |
68 Neutral | $2.23B | 10.71 | 22.11% | 1.89% | -1.03% | 24.64% | |
63 Neutral | $6.71B | 10.13 | 28.17% | ― | -0.68% | -25.24% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% |
* Consumer Cyclical Sector Average
Performance Comparison
GPI
Group 1 Automotive
445.13
184.82
71.00%
ABG
Asbury
260.55
54.13
26.22%
AN
AutoNation
174.35
29.17
20.09%
LAD
Lithia Motors
316.94
24.73
8.46%
PAG
Penske Automotive Group
165.29
16.92
11.40%
SAH
Sonic Automotive
67.39
17.05
33.87%
Group 1 Automotive Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -2.88% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Neutral
The earnings call reflected strong performance in the U.S. market with record revenues and effective capital allocation strategies. However, significant challenges were noted in the U.K. market due to regulatory changes and integration disruptions. While the U.S. results were particularly strong, the issues in the U.K. are a cause for concern.Highlights
Record Revenue Achievements
Group 1 Automotive reported total revenues of $5.5 billion in Q4 2024, an all-time quarterly record, including records in new vehicle sales ($2.9 billion), parts and service revenues ($680 million), and F&I ($226 million).
U.S. Market Performance
Record new vehicle units sold and sequential improvement in PRU, with new vehicle volumes outpacing the industry. Same-store used volumes were up 5%, and parts and service revenues saw a same-store growth of nearly 9%.
Increased Technician Headcount
Group 1 increased its technician headcount by 7% on a same-store basis in the U.S., contributing to improvements in aftersales capacity and revenue.
Strong F&I Performance
F&I revenues in the U.S. reached a quarterly record of $196 million with an F&I GPU of $2,415, up 3% sequentially and year-over-year.
Capital Allocation Strategy
Significant acquisitions in 2024, growing the company by 24% and repurchasing 25% of its stock over the past 3 years. $462 million remains in the share repurchase plan.
Lowlights
U.K. Market Challenges
Difficulties in the macroeconomic environment and government-imposed zero emissions vehicle mandates affecting new vehicle sales. The market fell short of the 2024 goal of 22% BEV mix.
U.K. Business Integration Disruptions
Integration of Inchcape's retail dealerships caused disruptions, including SG&A increases due to system conversions. The integration is expected to be substantially completed by Q1 2025.
U.K. SG&A Management Issues
U.K. same-store adjusted SG&A as a percentage of gross profit worsened sequentially by 760 basis points, reflecting challenges in cost control and efficiency during the integration period.
Impairment Charges
Fourth quarter adjusted net income excluded $33 million of impairment charges, primarily related to franchise rights intangible assets for 4 U.S. dealerships.
Company Guidance
During the Group 1 Automotive Fourth Quarter and Full Year 2024 Financial Results Conference Call, the company provided several key metrics and forward-looking guidance. Group 1 reported a record total revenue of $5.5 billion for the fourth quarter, with new vehicle sales contributing $2.9 billion, parts and service revenues at $680 million, and F&I reaching $226 million. The U.S. operations saw a 14% increase in new vehicle units sold, with same-store used volumes up 5%. The F&I business achieved a $109 increase in PRU, with new vehicle finance penetration improving. The company increased its technician headcount by 7% in the U.S. and plans to continue investing in aftersales, including a program to install air conditioning in U.S. shops by the end of 2025. Group 1's U.K. operations focused on integrating Inchcape's dealerships, impacting SG&A through the fourth quarter. They anticipate substantial completion of these integration activities by the end of the first quarter of 2025. The U.K. market faces challenges due to government-imposed zero emissions mandates, with the market falling short of the 2024 BEV mix target. Group 1 aims to improve performance through leadership and process changes in both the U.S. and U.K. markets.Group 1 Automotive Corporate Events
Executive/Board Changes
Group 1 Automotive Announces Retirement of Senior VP
Neutral
Feb 26, 2025
On February 26, 2025, Group 1 Automotive announced the retirement of Michael D. Jones, Senior Vice President – Aftersales, effective September 1, 2025. Post-retirement, Mr. Jones will continue as a part-time employee until December 31, 2025, receiving his regular salary and a prorated annual bonus. He will also benefit from continued vesting of his restricted stock awards, contingent upon compliance with certain agreement provisions.
Financial Disclosures
Group 1 Automotive to Announce 2024 Financial Results
Neutral
Jan 15, 2025
On January 14, 2025, Group 1 Automotive announced its plans to release the financial results for the fourth quarter and full year 2024 on January 29, 2025, before the market opens. This will be followed by a conference call hosted by the company’s senior management, including CEO Daryl Kenningham, to discuss the results, which will be available via live simulcast on the internet and a telephonic replay.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.