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Group 1 Automotive (GPI) Lags Q3 Earnings and Revenues
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Share price of Group 1 Automotive Inc. (GPI - Free Report) increased 0.9% to $59.66 on Oct 21, after the company reported third-quarter 2016 results. Group 1 Automotive recorded a 2.6% year-over-year increase in earnings per share to $1.96 in the third quarter of 2016 that missed the Zacks Consensus Estimate of $2.08. Adjusted net income declined 8.7% to $42 million from $46 million in the year-ago quarter.
On reported basis, Group 1 Automotive recorded a net income of $35.4 million or $1.65 per share. In the prior-year quarter, the company recorded a net profit of $45.3 million or $1.88 per share.
Revenues improved 0.8% year over year to a third-quarter record of $2.82 billion but narrowly missed the Zacks Consensus Estimate of $2.84 billion. The top line benefited from strong performance in the U.K.
Revenues from new vehicle retail sales fell 0.8% to $1.59 billion due to a 3.2% decrease in unit sales to 45,597 vehicles. Revenues from retailed used vehicles improved 2.2% to $702.6 million on a 1.6% rise in unit sales to 33,012 vehicles. Revenues from used vehicle wholesale sales increased 3.7% to $104.2 million. Used vehicles’ wholesale volume rose 0.7% to 15,027 units.
Revenues from the Parts and Service business improved 5.3% to $319.7 million. The company’s Finance and Insurance business witnessed a 1% rise in revenues to $108.7 million.
Gross profit increased 2.1% to $406.7 million from $398.4 million in the year-ago quarter. Operating income plunged 13.2% to $83.9 million from $96.6 million in the third quarter of 2015.
Segment Details
Revenues in the U.S. business fell 2.9% to $2.3 billion. The segment recorded a 5.5% decrease in new vehicle retail sales to $1.25 billion and a 0.2% decline in total used vehicles’ retail sales to $650.4 million. Parts and Service revenue increased 2.5%, while Finance and Insurance revenues decreased 1.7%.
Revenues in the U.K. business augmented 56.7% to $436 million from $327.4 million in the year-ago quarter. Retail new vehicle sales surged 66.3% to $25.1 million and total used vehicle sales escalated 40% to $135.4 million. Parts and Service revenue increased 60.8%, while Finance and Insurance revenues advanced 68.2%.
Revenues from the Brazilbusiness fell 19.4% to $112.5 million in the reported quarter. New vehicle retail sales declined 22.9% to $77.4 million, while total used vehicle sales fell 12.7% to $21 million. Parts and Service revenue were down 7.5%, while Finance and Insurance revenues fell 5.1%.
Financial Details
Group 1 Automotive’s cash and cash equivalents increased 76.2% to $22.9 million as of Sep 30, 2016, from $13 million as of Dec 31, 2015. Total debt amounted to $1.3 billion as of Sep 30, 2016, compared with $1.25 billion as of Dec 31, 2015.
Share Repurchases
During the third quarter of 2016, Group 1 Automotive repurchased 244,205 shares at an average price of $50.61 for $12.4 million. As of Oct 20, 2016, the company had $22.4 million remaining under the prior share repurchase authorization.
Year to date, Group 1 Automotive has repurchased 2.3 million shares, representing a 10% reduction from the share count as of Dec 31, 2015.
Acquisitions & Dispositions
During the third quarter of 2016, Group 1 Automotive divested Hyundai of Escondido, CA and Ira Porsche of Danvers, MA. In Oct 2016, the company also divested Honda of Van Nuys, CA. The three dealerships together provided revenues of $120 million in the trailing 12 months.
In the third quarter, Group 1 Automotive was awarded the dealership of Porsche at El Paso, TX. The store is expected to open in late 2017.
In addition, Group 1 Automotive acquired Ford Basingstoke and Ford Newbury dealerships in London, U.K. in Oct 2016. The stores will be rebranded as Think Ford Basingstoke and Think Ford Newbury. They are projected to generate roughly $65 million in annual revenues.
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Group 1 Automotive (GPI) Lags Q3 Earnings and Revenues
Share price of Group 1 Automotive Inc. (GPI - Free Report) increased 0.9% to $59.66 on Oct 21, after the company reported third-quarter 2016 results. Group 1 Automotive recorded a 2.6% year-over-year increase in earnings per share to $1.96 in the third quarter of 2016 that missed the Zacks Consensus Estimate of $2.08. Adjusted net income declined 8.7% to $42 million from $46 million in the year-ago quarter.
On reported basis, Group 1 Automotive recorded a net income of $35.4 million or $1.65 per share. In the prior-year quarter, the company recorded a net profit of $45.3 million or $1.88 per share.
Revenues improved 0.8% year over year to a third-quarter record of $2.82 billion but narrowly missed the Zacks Consensus Estimate of $2.84 billion. The top line benefited from strong performance in the U.K.
Revenues from new vehicle retail sales fell 0.8% to $1.59 billion due to a 3.2% decrease in unit sales to 45,597 vehicles. Revenues from retailed used vehicles improved 2.2% to $702.6 million on a 1.6% rise in unit sales to 33,012 vehicles. Revenues from used vehicle wholesale sales increased 3.7% to $104.2 million. Used vehicles’ wholesale volume rose 0.7% to 15,027 units.
Revenues from the Parts and Service business improved 5.3% to $319.7 million. The company’s Finance and Insurance business witnessed a 1% rise in revenues to $108.7 million.
Gross profit increased 2.1% to $406.7 million from $398.4 million in the year-ago quarter. Operating income plunged 13.2% to $83.9 million from $96.6 million in the third quarter of 2015.
Segment Details
Revenues in the U.S. business fell 2.9% to $2.3 billion. The segment recorded a 5.5% decrease in new vehicle retail sales to $1.25 billion and a 0.2% decline in total used vehicles’ retail sales to $650.4 million. Parts and Service revenue increased 2.5%, while Finance and Insurance revenues decreased 1.7%.
Revenues in the U.K. business augmented 56.7% to $436 million from $327.4 million in the year-ago quarter. Retail new vehicle sales surged 66.3% to $25.1 million and total used vehicle sales escalated 40% to $135.4 million. Parts and Service revenue increased 60.8%, while Finance and Insurance revenues advanced 68.2%.
Revenues from the Brazil business fell 19.4% to $112.5 million in the reported quarter. New vehicle retail sales declined 22.9% to $77.4 million, while total used vehicle sales fell 12.7% to $21 million. Parts and Service revenue were down 7.5%, while Finance and Insurance revenues fell 5.1%.
Financial Details
Group 1 Automotive’s cash and cash equivalents increased 76.2% to $22.9 million as of Sep 30, 2016, from $13 million as of Dec 31, 2015. Total debt amounted to $1.3 billion as of Sep 30, 2016, compared with $1.25 billion as of Dec 31, 2015.
Share Repurchases
During the third quarter of 2016, Group 1 Automotive repurchased 244,205 shares at an average price of $50.61 for $12.4 million. As of Oct 20, 2016, the company had $22.4 million remaining under the prior share repurchase authorization.
Year to date, Group 1 Automotive has repurchased 2.3 million shares, representing a 10% reduction from the share count as of Dec 31, 2015.
Acquisitions & Dispositions
During the third quarter of 2016, Group 1 Automotive divested Hyundai of Escondido, CA and Ira Porsche of Danvers, MA. In Oct 2016, the company also divested Honda of Van Nuys, CA. The three dealerships together provided revenues of $120 million in the trailing 12 months.
In the third quarter, Group 1 Automotive was awarded the dealership of Porsche at El Paso, TX. The store is expected to open in late 2017.
In addition, Group 1 Automotive acquired Ford Basingstoke and Ford Newbury dealerships in London, U.K. in Oct 2016. The stores will be rebranded as Think Ford Basingstoke and Think Ford Newbury. They are projected to generate roughly $65 million in annual revenues.
GROUP 1 AUTO Price, Consensus and EPS Surprise
GROUP 1 AUTO Price, Consensus and EPS Surprise | GROUP 1 AUTO Quote
Zacks Rank
Currently, Group 1 Automotive carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the auto space include The Goodyear Tire & Rubber Company (GT - Free Report) , Tata Motors Limited and Standard Motor Products Inc. (SMP - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Goodyear Tire has seen its earnings estimates move north over the last 60 days.
Tata Motors has a long-term expected growth rate of 3.60%.
Standard Motor has a long-term expected growth rate of 15%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>