It has been about a month since the last earnings report for Group 1 Automotive (
GPI Quick Quote GPI - Free Report) . Shares have lost about 0.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Group 1 Automotive due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Group 1's Q1 Earnings Beat Estimates, Increase Y/Y
Group 1 reported first-quarter 2023 adjusted earnings per share of $10.93, which beat the Zacks Consensus Estimate of $9.70. The outperformance can be attributed to higher-than-anticipated revenues from all but the Financial/Insurance segment. The bottom line increased from the prior-year quarter’s $10.81 per share.
The automotive retailer registered net sales of $4,130 million, beating the Zacks Consensus Estimate of $3,921 million. Also, the top line rose 7.4% from the year-ago quarter’s $3,844.4 million.
New-vehicle retail sales increased 12.1% from the prior-year quarter to $1,955.7 million and beat the Zacks Consensus Estimate of $1,808 million. The gross profit from the unit totaled $186.7 million, decreasing 7.2% year over year but surpassing the consensus mark of $169 million.
Used-vehicle retail sales inched down 0.8% from the year-ago period to $1,348.9 million but outpaced the consensus mark of $1,250 million. The gross profit from the unit was $76.7 million, shrinking 12.6% year over year but topping the consensus estimate of $55 million.
Used-vehicle wholesale sales surged 19.8% year over year to $112 million and came ahead of the consensus mark of $90 million. The unit recorded a gross profit of $2 million, down 28.8% year over year.
In the Parts and Service business, the top line rose 16% from the year-ago quarter to $548.3 million and topped the Zacks Consensus Estimate of $509 million. The gross profit for the segment was $297.3 million, climbing 14.4% year over year and outpacing the consensus mark of $274 million.
Revenues from the Finance and Insurance business tailed off 4.6% from the prior-year period’s levels to $165.1 million, missing the consensus mark of $168 million.
Segments in Detail
In the reported quarter, revenues in the U.S. business segment climbed 8.1% year over year to $3,342.2 million. The segment’s gross profit slid 0.5% to $617.6 million. During the reported quarter, retail new-vehicle, retail used-vehicle and wholesale used-vehicle units sold were 30,883, 34,440 and 7,480, respectively.
In the reported period, revenues climbed 4.6% year over year to $787.7 million for the U.K. business segment. The gross profit was $110.4 million, up 6.3% from the year-ago quarter. During the reported quarter, the retail new-vehicle, retail used-vehicle, and wholesale used-vehicle units sold were 8,766, 10,997 and 2,894, respectively.
Selling, general and administrative expenses were up 10.6% year over year to $462.8 million. Group 1 Automotive had cash and cash equivalents of $21.3 million as of Mar 31, 2023, down from $47.9 million as of 2022-end. Total debt was $1,988.5 million as of Mar 31, 2023, down from $2,082.5 million recorded on Dec 31, 2022.
During the quarter under discussion, GPI repurchased 180,982 shares at an average price of $191.85 per common share for a total of $34.7 million. As of Mar 31, 2023, the company had 14.1 million common shares outstanding. It currently has $128.5 million remaining on its authorized stock buyback program.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 10.31% due to these changes.
At this time, Group 1 Automotive has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, 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.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Group 1 Automotive has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Group 1 Automotive belongs to the Zacks Automotive - Retail and Whole Sales industry. Another stock from the same industry, Lithia Motors (
LAD Quick Quote LAD - Free Report) , has gained 6.4% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Lithia Motors reported revenues of $6.97 billion in the last reported quarter, representing a year-over-year change of +4%. EPS of $8.44 for the same period compares with $11.96 a year ago.
Lithia Motors is expected to post earnings of $9.12 per share for the current quarter, representing a year-over-year change of -25.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.5%.
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 C.