A month has gone by since the last earnings report for Group 1 Automotive (GPI). Shares have added about 0.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Group 1 Automotive due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Group 1 Automotive Q1 Earnings Beat Estimates, Up Y/Y
Group 1 Automotive reported adjusted earnings per share of $2.06 in first-quarter 2019, beating the Zacks Consensus Estimate of $1.81. The bottom line improved from the prior-year quarter’s number of $1.70.
Reportedly, the company’s adjusted net income increased 6% year over year to $38.2 million. Revenues of $2.9 billion declined 0.4% year over year. Total revenues fell 1.8% year over year to $2.81 billion, which missed the Zacks Consensus Estimate of $2.82 billion.
Revenues from new-vehicle retail sales fell 5.3% to $1 billion. The used-vehicle retail sales grew 5.4% to $594 million. However, revenues from wholesale used-vehicle sales declined 20.7% to $42.8 million.
In the Parts and Service business, the top line improved 4.6% to $298 million. Group 1 Automotive’s revenues from the Finance and Insurance business were $96 million, in line with the prior-year quarter.
Gross profit increased 3.3% year over year to $347 million. Operating income went up 9.8% to $86.8 million.
Segments in Detail
On a same-store basis, revenues in the U.S. business segment fell 1.2% year over year to $2.1 billion. The segment’s gross profit rose 4% year over year to $339 million. During the reported quarter, units of retail new vehicles, retail used vehicles and wholesale used vehicles sold were 25,569; 28,389 and 6,921.
On a same-store basis, revenues fell 8.3% year over year to $564 million in the U.K. business segment. Gross profit was $63.3 million, marking a 5.4% fall from the first quarter of 2018. The units of retail new vehicles, retail used vehicles and wholesale used vehicles sold were 9,215; 7,291 and 4,870.
On a same-store basis, revenues in the Brazil business segment declined 15.9% year over year to $93.4 million in the reported quarter. Gross profit declined 9.5% year over year to $11.4 million. The units of retail new vehicles, retail used vehicles and wholesale used vehicles sold were 1,850; 991 and 411.
Group 1 Automotive’s cash and cash equivalents increased to $33.6 million as of Mar 31, 2019, from $15.9 million as of Dec 31, 2018.
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 15.98% 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 D. 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 trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Group 1 Automotive has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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