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Group 1 Automotive Inc GPI

Morningstar Rating
$268.65 −1.97 (0.73%)
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Company Report

Group 1 Plans More Buybacks and Acquisitions

Group 1's restructurings and investment in technology for used-vehicle procurement have paid off. A common operating metric in the dealer sector is selling, general, and administrative expenses as a percentage of gross profit; Group 1's ratio improved to 64.2% including rent expense in 2023 compared with 77.9% in 2007, and management expects it to remain below 70% thanks to permanently reducing headcount by 7% during the pandemic. The company in 2018 began transforming itself with its Val-U-Line used-vehicle strategy and scheduling accommodations for service technicians, which are improving employee retention and increasing technician headcount. Val-U-Line comes from Group 1 wisely, in our opinion, wanting to retail more used vehicles rather than send them off to auction, because the former is more profitable. Val-U-Line only sells high-mileage used vehicles. The AcceleRide omnichannel platform should keep the firm competitive with new entrants to the online used-vehicle market such as Carvana but is also for new vehicles, service, and buying vehicles from consumers. We think digital will enable much better SG&A leverage than the company has had in the past and increase used-vehicle sales over time.

Price vs Fair Value

GPI is trading at a 7% discount.
Price
$270.65
Fair Value
$412.00
Uncertainty
High
1-Star Price
$256.90
5-Star Price
$319.00
Economic Moat
Pygpfv
Capital Allocation
Pycwmtjx

Bulls Say, Bears Say

Bulls

Auto dealerships are profitable businesses with a diversified stream of earnings beyond selling new vehicles.

Bears

Because publicly traded dealers command greater share in some markets, manufacturers may refuse to approve transfers of franchise rights at some dealerships, limiting acquisition-based growth.

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News

Trading Information

Previous Close Price
$270.62
Day Range
$266.38269.99
52-Week Range
$194.79310.76
Bid/Ask
$268.60 / $269.33
Market Cap
$3.68 Bil
Volume/Avg
9,586 / 138,479

Key Statistics

Price/Earnings (Normalized)
6.12
Price/Sales
0.21
Dividend Yield (Trailing)
0.67%
Dividend Yield (Forward)
0.69%
Total Yield
5.34%

Company Profile

As of year-end 2023, Group 1 owns and operates 41 collision centers and 199 automotive dealerships in the US and the UK, offering 35 brands of automobiles altogether. About 150 of the stores are in the US with locations mostly in metropolitan areas in 17 states in the Northeast, Southeast, Midwest, and California. Texas alone contributed 38% of new-vehicle unit volume in 2023 and the UK about 19%. Texas, Oklahoma, and Massachusetts combined was 53%. Revenue in 2023 totaled $17.9 billion. The company was founded in 1995 and is based in Houston.
Sector
Consumer Cyclical
Industry
Auto & Truck Dealerships
Stock Style Box
Small Value
Total Number of Employees
16,011

Competitors

Valuation

Metric
GPI
PAG
ABG
Price/Earnings (Normalized)
6.129.546.04
Price/Book Value
1.382.181.32
Price/Sales
0.210.350.30
Price/Cash Flow
4.878.944.56
Price/Earnings
GPI
PAG
ABG

Financial Strength

Metric
GPI
PAG
ABG
Quick Ratio
0.270.210.43
Current Ratio
1.111.002.07
Interest Coverage
5.757.298.55
Quick Ratio
GPI
PAG
ABG

Profitability

Metric
GPI
PAG
ABG
Return on Assets (Normalized)
8.38%7.41%9.14%
Return on Equity (Normalized)
24.53%24.75%24.78%
Return on Invested Capital (Normalized)
12.13%10.86%13.08%
Return on Assets
GPI
PAG
ABG
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