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What's in Store for Group 1 Automotive's (GPI) Q3 Earnings?

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Group 1 Automotive (GPI - Free Report) is slated to release third-quarter 2020 results on Oct 29, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $6.56 per share on revenues of $3.04 billion.

This automotive retailer delivered better-than-expected earnings in the last reported quarter on solid revenues from the new vehicles segment.
The company has surpassed estimates in all of the preceding four quarters, the average surprise being 98.12%. This is depicted in the graph below:

Group 1 Automotive, Inc. Price and EPS Surprise

Group 1 Automotive, Inc. Price and EPS Surprise

Group 1 Automotive, Inc. price-eps-surprise | Group 1 Automotive, Inc. Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for Group1 Automotive’s third-quarter earnings per share significantly moved $3.32 north in the past 30 days. Moreover, this compares favorably with the year-ago quarter’s earnings of $3.02 per share, indicating a 117.2% surge year on year. However, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year decline of 2.4%.

Earnings Whispers

Our proven Zacks model does not conclusively predict an earnings beat for Group 1 Automotive this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here as elaborated below.

Earnings ESP: Group 1 Automotive has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate is the same as the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Group 1 Automotive currently flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Factors

With the coronavirus pandemic marring the auto industry, contributions across all the major segments of Group 1 Automotive might have been soft, which is likely to have dented the company’s revenues during the third quarter. This dismal performance resulted from the decline in number of vehicles in the serviceable fleet and increased vehicle complexity.

The Zacks Consensus Estimate for quarterly revenues from the new vehicle retail sales, which has the highest contribution to the company’s revenues, is pegged at $1,623 million, indicating a decline from the $1,652.2 million reported in the year-ago quarter.

The consensus estimate for revenues from used vehicle retail sales for the July-September quarter is pegged at $815 million, suggesting a fall from the $869.7 million recorded in third-quarter 2019.

Further, the Zacks Consensus Estimate for revenues from the parts and service segment during the September-end quarter is pinned at $366 million, lower than the $385.3 million reported in the prior-year quarter.

Nonetheless, Group 1 Automotive’s omni-channel efforts to optimize customer shopping experience as well digital ramp-up focused on online customer scheduling-appointment system are likely to have boosted sales during the quarter in discussion. Cost-containment efforts are also expected to have aided the company.

Stocks to Consider

Here are a few stocks worth considering, as these have the right combination of elements to come up with an earnings beat this time around:

Lear Corporation (LEA - Free Report) has an Earnings ESP of +2.78% and currently sports a Zacks Rank of 1, at present. It is scheduled to report earnings results on Nov 30.

General Motors (GM - Free Report) has an Earnings ESP of +1.25% and carries a Zacks Rank of 3 currently. The company will announce quarterly figures on Nov 5.

Cooper Tire Rubber Company has an Earnings ESP of +22.1% and currently holds a Zacks Rank #3. The company is slated to release quarterly numbers on Oct 29.

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