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1. Company Snapshot

1.a. Company Description

Group 1 Automotive, Inc., through its subsidiaries, operates in the automotive retail industry.The company sells new and used cars, light trucks, and vehicle parts, as well as service and insurance contracts; arranges related vehicle financing; and offers automotive maintenance and repair services.It operates primarily in 17 states in the United States; and 35 towns in the United Kingdom.


As of July 11, 2022, the company owned and operated 204 automotive dealerships, 273 franchises, and 47 collision centers that offer 35 brands of automobiles.Group 1 Automotive, Inc.was incorporated in 1995 and is based in Houston, Texas.

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1.b. Last Insights on GPI

Group 1 Automotive's recent performance was negatively impacted by its Q3 earnings miss, with earnings of $10.45 per share, falling short of the Zacks Consensus Estimate of $10.64 per share. Despite strong revenue gains across new, used, and service segments, profitability was mixed, with rising costs outpacing revenue gains. Additionally, Allspring Global Investments Holdings LLC reduced its stake in the company by 5.4%, selling 139 shares. JPMorgan raised its price target to $435 but maintains a Neutral rating, citing electrical vehicle mix and UK headwinds.

1.c. Company Highlights

2. Group 1 Automotive's Q3 2025 Earnings: A Strong Performance Despite U.K. Challenges

Group 1 Automotive delivered an all-time record quarterly revenue of $5.8 billion, driven by strong performance in parts and service, used vehicles, and F&I. The company's gross profit was $920 million, and adjusted diluted EPS was $10.45, slightly below estimates of $10.64. The U.S. business continued to execute well, with revenue growth across all major lines, while the U.K. faced a challenging operating environment, with same-store revenues growing despite a decline in new vehicle volumes.

Publication Date: Nov -03

📋 Highlights
  • Record Quarterly Revenues:: Achieved $5.8 billion, driven by parts/service ($1.2B), used vehicles ($950M), and F&I ($320M) segments.
  • Strong Adjusted Earnings:: Adjusted diluted EPS reached $10.45, with $135 million in adjusted net income despite U.K. challenges.
  • U.S. Market Dominance:: 6% YoY customer count growth, 16% warranty revenue increase, and 3% repair order growth in parts/service.
  • U.K. Cost-Cutting Measures:: $8 million in store expense reductions and 10% corporate headcount reduction to offset 6% new vehicle revenue decline.
  • Share Repurchase Activity:: $60.9 million spent post-Q3 to repurchase 140,000 shares, reducing share count by ~5% since January 1.

Segment Performance

In the U.S., the company achieved record quarterly revenues in used vehicles, parts and service, and F&I, driven by healthy demand and balanced inventory levels. The U.K. business, however, faced headwinds, with a 4% decline in new vehicle same-store volumes and a 6% decline in local currency same-store new vehicle revenues. Management is taking decisive actions to control costs and strengthen operational efficiency in the U.K.

Operational Highlights

The company's customer pay and warranty growth were notable, with a 3% year-over-year increase in customer count in the U.S. and 6% in the U.K. Warranty growth was 16%, although the margin mix was affected by a decline in collision business. As Daryl Kenningham noted, "We've seen healthy repair order growth, supported by a strong customer count." The company is maintaining discipline in its used car acquisition process, with a focus on trades and customer outside purchases.

Valuation and Outlook

With a P/E Ratio of 13.89 and an EV/EBITDA of 11.77, the stock appears reasonably valued. Analysts estimate revenue growth at 3.6% for next year, and the company's strong balance sheet and cash flow generation support its flexible capital allocation approach. The company's ROE is 12.34%, indicating a relatively strong return on equity. As the company continues to navigate the challenges in the U.K. and maintain its operational discipline in the U.S., investors will be watching closely for signs of improvement in the U.K. market.

Share Repurchase and Dividend

The company repurchased approximately 186,000 shares at an average price of $443.81 and paid $6.4 million in dividends to shareholders. Subsequent to the third quarter, the company repurchased an additional 140,000 shares under a Rule 10b5-1 trading plan, resulting in an approximate 5% reduction in share count since January 1. The company's dividend yield is 0.5%, which, while not particularly high, is a stable source of return for investors.

3. NewsRoom

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YieldMax® ETFs Announces Weekly Distributions for Group 1 ETFs

Dec -02

Source: globenewswire.com

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Advantage Alpha Capital Partners LP Decreases Position in Group 1 Automotive, Inc. $GPI

Nov -28

Source: defenseworld.net

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YieldMax® ETFs Announces Weekly Distributions for Group 1 ETFs

Nov -25

Source: globenewswire.com

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778 Shares in Group 1 Automotive, Inc. $GPI Purchased by AXQ Capital LP

Nov -25

Source: defenseworld.net

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YieldMax® ETFs Announces Weekly Distributions for Group 1 ETFs

Nov -18

Source: globenewswire.com

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Campbell & CO Investment Adviser LLC Acquires Shares of 867 Group 1 Automotive, Inc. $GPI

Nov -17

Source: defenseworld.net

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Group 1 Automotive (NYSE:GPI) Board of Directors Authorizes Share Repurchase Program

Nov -12

Source: defenseworld.net

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Group 1 Automotive Board Approves New Share Repurchase Authorization & Declares Quarterly Dividend

Nov -11

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.32%)

6. Segments

New Vehicle Retail

Expected Growth: 7.5%

The 7.5% growth in New Vehicle Retail from Group 1 Automotive, Inc. is driven by increasing demand for electric and luxury vehicles, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on digital retailing and online sales platforms has improved customer experience, leading to higher sales conversions. Furthermore, the company's diversified brand portfolio and strong relationships with manufacturers have enabled it to capitalize on market trends and preferences.

Used Vehicle Retail

Expected Growth: 7.2%

The 7.2% growth in Used Vehicle Retail from Group 1 Automotive, Inc. is driven by increasing demand for affordable vehicles, expansion of online marketplaces, and strategic acquisitions. Additionally, the company's focus on certified pre-owned vehicles, competitive pricing, and improved customer experience have contributed to the growth.

Parts and Service

Expected Growth: 6.8%

The 6.8% growth in Parts and Service at Group 1 Automotive, Inc. is driven by increasing vehicle complexity, rising average vehicle age, and growing demand for maintenance and repair services. Additionally, the company's focus on customer retention, expanded service offerings, and strategic acquisitions have contributed to this growth.

Finance, Insurance and Other, Net

Expected Growth: 7.8%

The 7.8% growth in Finance, Insurance and Other segment of Group 1 Automotive, Inc. is driven by increased penetration of finance and insurance products, expansion of online financing platforms, and strategic partnerships with lenders, resulting in higher revenue from loan and lease originations, as well as growth in insurance premiums.

Used Vehicle Wholesale

Expected Growth: 7.0%

The 7.0% growth in Used Vehicle Wholesale from Group 1 Automotive, Inc. is driven by increasing demand for certified pre-owned vehicles, expansion of online marketplaces, and strategic partnerships with OEMs. Additionally, the company's focus on digital retailing and improved inventory management have contributed to the growth.

7. Detailed Products

New Vehicle Sales

Group 1 Automotive, Inc. sells new vehicles from various manufacturers such as Toyota, Ford, and Honda through its network of dealerships.

Used Vehicle Sales

The company sells pre-owned vehicles, including certified pre-owned vehicles, through its dealerships and online marketplaces.

Parts and Accessories

Group 1 offers a range of original equipment manufacturer (OEM) and aftermarket parts and accessories for vehicles.

Service and Repair

The company provides vehicle maintenance and repair services, including routine maintenance, repairs, and warranty work.

Financing and Insurance

Group 1 offers financing and insurance products to customers, including financing options and extended warranty programs.

Collision Repair

The company provides collision repair services, including body shop repairs and paintless dent repair.

8. Group 1 Automotive, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Group 1 Automotive, Inc. is medium due to the presence of alternative modes of transportation and the increasing popularity of ride-sharing services.

Bargaining Power Of Customers

The bargaining power of customers is high due to the availability of multiple options for car purchases and the ease of comparing prices online.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the large number of suppliers available and the company's ability to negotiate prices.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the automotive industry, including the need for significant capital investment and regulatory compliance.

Intensity Of Rivalry

The intensity of rivalry is high due to the large number of competitors in the automotive industry and the ongoing price wars between dealerships.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 40.94%
Debt Cost 10.87%
Equity Weight 59.06%
Equity Cost 10.87%
WACC 10.87%
Leverage 69.31%

11. Quality Control: Group 1 Automotive, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Quality: 3.5

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Quality: 4.4

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

404.21$

Current Price

404.21$

Potential

-0.00%

Expected Cash-Flows