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Group 1's Lexus Stores Buyout to Boost Presence in New Mexico

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Group 1 Automotive, Inc. GPI recently announced the acquisition of two Lexus dealerships, in Albuquerque and Santa Fe, expanding its business in the New Mexico market. The acquisition is anticipated to generate roughly $90 million in annualized revenues.

With the latest acquisition, the company is expanding its footprint in the dynamic New Mexico market and strengthening its partnership with Lexus. In fact, the acquisition will expand Group 1’s total representation in New Mexico to nine automotive franchise operations. The automotive franchises include luxury brands like BMW / MINI, BMW Mottorad (motorcycles), Lexus and Jaguar/Land Rover.

Meanwhile, Group 1 has expanded its footprint in the U.K. through acquisitions over the past few years. This July, the company acquired five new franchises in the U.K. It also intends to fortify its presence in the United States. For the short term, it aims to acquire attractive businesses in the U.S. markets, which will open up growth opportunities, and divest the unprofitable ones.

In the past three months, shares of Group 1 have outperformed the industry it belongs to. Its shares have rallied 23.2% compared with the industry’s rise of 9.7%.

In third-quarter 2019, revenues in the U.S. business segment grew 10.1% year over year to $2.42 billion, while gross profit rose 9.8% year over year to $387 million. Revenues edged down 0.2% year over year to $584.6 million for the U.K. business segment. Gross profit was $65 million, marking a 5.4% fall from the third quarter of 2018.

Zacks Rank and Other Stocks to Consider

Currently, Group 1 carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the Auto-Tires-Trucks sector include Weichai Power Co. WEICY, Spartan Motors, Inc. and SPX Corporation SPXC. While Weichai Power flaunts a Zacks Rank #1 (Strong Buy), Spartan Motors and SPX carry a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Weichai Power has a projected earnings growth rate of 6.11% for the current year. Its shares have gained 70.6% over the past year.

Spartan Motors has an estimated earnings growth rate of 85.42% for the ongoing year. The company’s shares have surged 155.5% in a year’s time.

SPX has an expected earnings growth rate of 23.18% for 2019. The stock has appreciated 85.1% in the past year.

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