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Group 1 Automotive Inc GPI

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Group 1 Has Record Q1 and We See It In Good Shape to Handle Its Inventory Shortage

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.

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Company Profile

Business Description

Group 1 owns and operates about 185 automotive dealerships, 237 franchises, and 49 collision service centers in the U.S., U.K., and Brazil offering 31 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.

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

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