Group 1 (GPI) Q2 Earnings & Sales Beat Estimates, Rise Y/Y

Group 1 Automotive, Inc. GPI reported second-quarter 2022 adjusted earnings per share of $12, beating the Zacks Consensus Estimate of $10.56. The outperformance can be attributed to the higher-than-anticipated profit from the company’s new-vehicle retail, and Parts and Service segments. The bottom line increased 17.8% from the prior-year quarter’s $10.19 per share.

The automotive retailer registered net sales of $4,145.5 million, beating the Zacks Consensus Estimate of $3,998 million. Also, the top line rose 14.3% from the year-ago quarter’s $3,625.6 million.

Group 1 Automotive, Inc. Price, Consensus and EPS Surprise

Group 1 Automotive, Inc. Price, Consensus and EPS Surprise

Group 1 Automotive, Inc. price-consensus-eps-surprise-chart | Group 1 Automotive, Inc. Quote

Quarter Highlights

New-vehicle retail sales increased 2.5% from the prior-year quarter to $1,851.3 million. The figure, however, lagged the Zacks Consensus Estimate of $1,854 million. The gross profit from the unit totaled $210.3 million, increasing 31.3% year over year. The reported profit figure also surpassed the consensus mark of $190 million.

Used-vehicle retail sales rose 27.2% from the year-ago period to $1,505.4 million and outpaced the consensus mark of $1,384 million. The gross profit from the unit summed $89.5 million, shrinking 17.3% year over year. The reported profit figure matched the consensus mark.

Used-vehicle wholesale sales inched up 2.3% from the corresponding quarter last year to $95.8 million but missed the consensus mark of $100 million. The gross profit from used-vehicle wholesale sales plummeted to $0.8 million from $8.9 million reported in the year-ago period. The reported figure significantly lagged the consensus mark of $2.88 million.

In the Parts and Service business, the top line rose 31.2% from the year-ago quarter’s to $502.6 million. The revenue figure topped the Zacks Consensus Estimate of $483 million. The gross profit for the segment summed $277.7 million, climbing 30.6% year over year and outpacing the consensus mark of $259 million.

Revenues from the Finance and Insurance business improved 19.2% from the prior-year period’s levels to $190.2 million, topping the consensus mark of $177 million. The profit for the segment was break-even.

In the second quarter, Group 1 completed a number of acquisitions — namely a Toyota dealership in Mexico, three dealerships and a collision center in Louisiana, which are likely to aid its top line. Moreover, it concluded the disposition of its Brazilian operations.

Segments in Detail

In the reported quarter, revenues in the U.S. business segment climbed 17.5% year over year to $3,437.2 million. The segment’s gross profit grew 20.5% to $676.3 million. During the reported quarter, the retail new-vehicle, retail used-vehicle and wholesale used-vehicle units sold were 31,627, 38,523 and 6,059, respectively.

In the reported period, revenues nominally increased 1.1% year over year to $708.2 million for the U.K. business segment. Also, the gross profit summed $92.1 million, up 4.2% from the year-ago quarter. During the reported quarter, the retail new-vehicle, retail used-vehicle, and wholesale used-vehicle units sold were 7,195, 10,384 and 3,455, respectively.

Financial Position

Selling, general and administrative expenses flared up 24.8% year over year to $460.2 million. Group 1 Automotive had cash and cash equivalents of $26.3 million as of Jun 30, 2022, up from $14.9 million in 2021-end. Total debt was $1,970.4 million as of Jun 30, 2022, down from $2,035.7 million recorded on Dec 31, 2021.

During the current quarter, GPI repurchased 799,033 shares at an average price of $173.9 per common share for a total of $139 million. As of Jun 30, 2022, the company had 15.9 million common shares outstanding.

Zacks Rank & Key Picks

GPI carries a Zacks Rank #3 (Hold), currently.

Better-ranked players in the auto space include Genuine Parts Company GPC, LCI Industries LCII and Standard Motor Products SMP, each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Genuine Parts has an expected earnings growth rate of 15.8% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 1.9% upward in the past 30 days.

Genuine Parts’ earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. GPC pulled off a trailing four-quarter earnings surprise of 11.03%, on average. The stock has risen 20.8% over the past year.

LCI Industries has an expected earnings growth rate of 65.9% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.

LCI Industries’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. LCII pulled off a trailing four-quarter earnings surprise of 21.81%, on average. The stock has declined 7.3% in the past year.

Standard Motor has an expected earnings growth rate of 5.2% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.

Standard Motor’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. SMP pulled off a trailing four-quarter earnings surprise of 40.34%, on average. The stock has risen 8.8% over the past year.

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