Analyst Note| David Whiston, CFA, CPA, CFE |
Group 1 started 2021 with record first-quarter results and same-store revenue up 12.9%. Adjusted diluted EPS of $5.57 more than tripled from first-quarter 2020, when the pandemic started and easily beat the Refinitiv consensus of $4.43. We are leaving our fair value estimate in place. All segments of importance posted year-over-year same-store revenue growth roughly in the midteens, except for service, which fell 1.7%. This is not unexpected given miles driven remain down significantly because of the pandemic, but a dramatic return to U.S. showrooms at the company’s stores in March makes management confident for the summer service business. That confidence is encouraging because dealers we cover have had mixed sentiment on their service business rebounding soon. Service is typically a gross margin business of at least 50%, so any rebound combined with strong vehicle demand is good news for Group 1, in our view.