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Group 1 Automotive Inc GPI

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Group 1's Second-Quarter Results Are Another Record for the Dealer Sector

Analyst Note

| David Whiston, CFA, CPA, CFE |

Group 1’s second quarter was a quarterly record and within the results the company signaled in a July 8 release, as we discussed in our note that day. Adjusted diluted EPS of $10.31 beat the Refinitiv consensus of $7.13 and more than tripled from second-quarter 2019’s $2.83. We are raising our fair value estimate to $184 from $162. The change is from the time value of money, higher revenue growth, and a 30-basis-point increase in our midcycle operating margin, including floorplan interest, to 3.5%. We made the latter change to reflect our expectation of better overhead cost leveraging long term due to benefits from the company’s AcceleRide omnichannel platform and the chance that inventories will be lower than prepandemic levels after the semiconductor shortage ends, which should enable better pricing power long term.

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Company Profile

Business Description

Group 1 owns and operates 48 collision centers and 188 automotive dealerships across 242 franchises in the U.S., U.K., and Brazil offering 32 brands of automobiles altogether. U.S. locations are mostly in metropolitan areas in 15 states in the Northeast, Southeast, Midwest, and in California. Revenue in 2020 totaled $10.9 billion. The company was founded in 1995 and is based in Houston.

800 Gessner, Suite 500
Houston, TX, 77024
T +1 713 647-5700
Sector Consumer Cyclical
Industry Auto & Truck Dealerships
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 12,337


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