How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you'd invested in Group 1 Automotive (
GPI Quick Quote GPI - Free Report) ten years ago? It may not have been easy to hold on to GPI for all that time, but if you did, how much would your investment be worth today? Group 1 Automotive's Business In-Depth
With that in mind, let's take a look at Group 1 Automotive's main business drivers.
Group 1 Automotive, Inc. is one of the leading automotive retailers in the world, with operations primarily located in the United States and the UK. As of Dec 31, 2021, the company's retail network consisted of 147 and 55 dealerships in the United States and the U.K., respectively. Through these dealerships, the firm sells new and used cars and light trucks. Apart from selling new and used vehicles, the company offers vehicle financing and insurance and service contracts. Further, it provides maintenance and repair services, along with sale of replacement parts and aftermarket automotive products.
The core brands of vehicles sold by Group 1 Automotive are Toyota/Lexus, BMW, Honda, Ford, Nissan, General Motors, Chrysler, Volkswagen/Audi/Porsche, Mercedes-Benz, Nissan, Jaguar and Hyundai.
In 2021, New Vehicle represented 48%; Used Vehicle contributed 36%; Service and Parts accounted for 12%; and Finance & Insurance represented 4% to the company’s total revenues.
In November, Group 1 announced the divestment plans of its Brazilian operations. Until the closure of its Brazilian operations, which is scheduled in the second quarter of 2022, operating results from the same will be reported as discontinued operations and excluded from continuing operations. Group 1 will, henceforth, not report Brazil as a separate segment and will only report the U.S. and U.K. segments.
Thus, the company currently operates through two reportable segments — the United States and the United Kingdom. In the United States, the major metropolitan areas in which the company has presence are — Alabama, California, Florida, Georgia, Kansas, Louisiana, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, Maine, Oklahoma, South Carolina and Texas.
The firm’s online retail platform, AcceleRide, which was deployed to all the U.S. dealerships in 2019, allows for a comprehensive shopping experience to the customers. The customer also has the ability to apply for financing and review and select F&I products as part of the online process.
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Group 1 Automotive, if you bought shares a decade ago, you're likely feeling really good about your investment today.
A $1000 investment made in May 2012 would be worth $3,374.27, or a 237.43% gain, as of May 10, 2022, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
In comparison, the S&P 500 gained 194.65% and the price of gold went up 11.70% over the same time frame.
Looking ahead, analysts are expecting more upside for GPI.
Group 1’s diversified product mix along with omnichannel efforts bode well. Acquisitions of dealerships and franchises to expand and optimize its portfolio are major tailwinds. In 2021, the auto retailer completed transactions representing $2.5 billion of acquired revenues. Buyout of Prime Automotive and Robinsons Group have bolstered Group 1's prospects. The company's AcceleRide platform and investor friendly moves are other positives. However, tight inventory amid chip concerns may induce lost revenues. Low inventory levels are particularly conspicuous in the new vehicle segment. As of Mar 31, 2022, Group 1 had 9 days’ supply of new vehicles and the firm doesn’t expect inventory levels to improve anytime soon. Rising debt levels is also concerning. Thus, the stock warrants a cautious stance.
The stock is up 11.95% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 3 higher, for fiscal 2022. The consensus estimate has moved up as well.