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Why Is Group 1 Automotive (GPI) Down 17.6% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Group 1 Automotive, Inc. (GPI - Free Report) . Shares have lost about 17.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Group 1 Automotive Q1 Earnings Miss on Lower Sales
Group 1 Automotive recorded a 3.8% year-over-year decrease in adjusted earnings per share to $1.53 in first-quarter 2017. The figure also missed the Zacks Consensus Estimate of $1.71. Adjusted net income decreased 11.5% to $32.8 million from $37.1 million in the year-ago quarter.
On a reported basis, Group 1 Automotive recorded a net income of $33.9 million or $1.58 per share. In the prior-year quarter, the company recorded a net income of $34.3 million or $1.47 per share.
Revenues decreased 3.4% year over year to $2.52 billion and missed the Zacks Consensus Estimate of $2.58 billion. The top line was weakened by lower sales in energy price that impacted markets, including Texas, Houston and Oklahoma.
Revenues from new vehicle retail sales fell 5.2% to $1.34 billion due to a 6.1% decrease in sales to 38,290 units. Revenues from retailed used vehicles dropped 4% to $660.9 million on a 3.7% decline in sales to 31,566 units. Revenues from wholesale used vehicle sales increased 2.5% to $104.2 million. Used vehicles’ wholesale volume rose 1.1% to 14,529 units.
From the Parts and Service business, revenues improved 2.9% to $271.2 million. The company’s Finance and Insurance business witnessed a 4.8% fall in revenues to $85.8 million.
Gross profit decreased 1.4% to $383.5 million from $389.1 million in the year-ago quarter. Operating income declined to $80.1 million from $82 million.
Segment Details
Revenues in the U.S.business fell 5.5% to $2 billion. The segment recorded a 7.5% decrease in new vehicle retail sales to $1 billion and a 5.6% decline in total used vehicles’ retail sales to $592.5 million. Parts and Service revenue increased 2.9%, while Finance and Insurance revenues declined 4.8%.
Revenues in the U.K.business augmented 4.3% to $450.3 million from $431.9 million in the year-ago quarter. Revenues from retail new vehicle sales rose 4.9% to $258.6 million and that from total used vehicle sales grew 2.6% to $145.9 million. Parts and Service revenue increased 6.5%, while Finance and Insurance revenues advanced 4.2%.
Revenues from the Brazilbusiness rose 6.3% to $100.8 million in the reported quarter. Revenues from new vehicle retail sales declined 4.1% to $60.3 million, while that from total used vehicle sales surged 33.7% to $26.7 million. Parts and Service revenues were up 11.1%, while Finance and Insurance revenues grew 48.1%.
Financial Details
Group 1 Automotive’s cash and cash equivalents increased to $33.8 million as of Mar 31, 2017 from $21 million as of Dec 31, 2016. Total debt amounted to $1.33 billion as of Mar 31, 2017 compared with $1.25 billion as of Dec 31, 2016.
Share Repurchases
During first-quarter 2017, Group 1 Automotive did not repurchase any shares. As of Apr 28, 2017, the company had $22.4 million remaining under the prior share repurchase authorization.
Acquisitions & Dispositions
During first-quarter 2017, Group 1 Automotive acquired a BMW franchise, which is expected to generate $5 million in annual revenues. The company also opened an add point in the U.K., expanding the Ford network to seven dealerships. Moreover, the company disposed of two dealerships in Brazil that generated revenues of approximately $25 million in the trailing 12 months.
In April 2017, the company also opened an add point in Austin, TX, increasing the U.S. Nissan network to nine dealerships. These add points are expected to generate approximately $60 million in annual revenues.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter. In the past month, the consensus estimate has shifted downward by 5.9% due to these changes.
At this time, Group 1 Automotive's stock has a strong score of 'A', on both growth and momentum front. Following the exact same course, the stock was allocated also a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth, and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.
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Why Is Group 1 Automotive (GPI) Down 17.6% Since the Last Earnings Report?
It has been about a month since the last earnings report for Group 1 Automotive, Inc. (GPI - Free Report) . Shares have lost about 17.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Group 1 Automotive Q1 Earnings Miss on Lower Sales
Group 1 Automotive recorded a 3.8% year-over-year decrease in adjusted earnings per share to $1.53 in first-quarter 2017. The figure also missed the Zacks Consensus Estimate of $1.71. Adjusted net income decreased 11.5% to $32.8 million from $37.1 million in the year-ago quarter.
On a reported basis, Group 1 Automotive recorded a net income of $33.9 million or $1.58 per share. In the prior-year quarter, the company recorded a net income of $34.3 million or $1.47 per share.
Revenues decreased 3.4% year over year to $2.52 billion and missed the Zacks Consensus Estimate of $2.58 billion. The top line was weakened by lower sales in energy price that impacted markets, including Texas, Houston and Oklahoma.
Revenues from new vehicle retail sales fell 5.2% to $1.34 billion due to a 6.1% decrease in sales to 38,290 units. Revenues from retailed used vehicles dropped 4% to $660.9 million on a 3.7% decline in sales to 31,566 units. Revenues from wholesale used vehicle sales increased 2.5% to $104.2 million. Used vehicles’ wholesale volume rose 1.1% to 14,529 units.
From the Parts and Service business, revenues improved 2.9% to $271.2 million. The company’s Finance and Insurance business witnessed a 4.8% fall in revenues to $85.8 million.
Gross profit decreased 1.4% to $383.5 million from $389.1 million in the year-ago quarter. Operating income declined to $80.1 million from $82 million.
Segment Details
Revenues in the U.S. business fell 5.5% to $2 billion. The segment recorded a 7.5% decrease in new vehicle retail sales to $1 billion and a 5.6% decline in total used vehicles’ retail sales to $592.5 million. Parts and Service revenue increased 2.9%, while Finance and Insurance revenues declined 4.8%.
Revenues in the U.K.business augmented 4.3% to $450.3 million from $431.9 million in the year-ago quarter. Revenues from retail new vehicle sales rose 4.9% to $258.6 million and that from total used vehicle sales grew 2.6% to $145.9 million. Parts and Service revenue increased 6.5%, while Finance and Insurance revenues advanced 4.2%.
Revenues from the Brazil business rose 6.3% to $100.8 million in the reported quarter. Revenues from new vehicle retail sales declined 4.1% to $60.3 million, while that from total used vehicle sales surged 33.7% to $26.7 million. Parts and Service revenues were up 11.1%, while Finance and Insurance revenues grew 48.1%.
Financial Details
Group 1 Automotive’s cash and cash equivalents increased to $33.8 million as of Mar 31, 2017 from $21 million as of Dec 31, 2016. Total debt amounted to $1.33 billion as of Mar 31, 2017 compared with $1.25 billion as of Dec 31, 2016.
Share Repurchases
During first-quarter 2017, Group 1 Automotive did not repurchase any shares. As of Apr 28, 2017, the company had $22.4 million remaining under the prior share repurchase authorization.
Acquisitions & Dispositions
During first-quarter 2017, Group 1 Automotive acquired a BMW franchise, which is expected to generate $5 million in annual revenues. The company also opened an add point in the U.K., expanding the Ford network to seven dealerships. Moreover, the company disposed of two dealerships in Brazil that generated revenues of approximately $25 million in the trailing 12 months.
In April 2017, the company also opened an add point in Austin, TX, increasing the U.S. Nissan network to nine dealerships. These add points are expected to generate approximately $60 million in annual revenues.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter. In the past month, the consensus estimate has shifted downward by 5.9% due to these changes.
Group 1 Automotive, Inc. Price and Consensus
Group 1 Automotive, Inc. Price and Consensus | Group 1 Automotive, Inc. Quote
VGM Scores
At this time, Group 1 Automotive's stock has a strong score of 'A', on both growth and momentum front. Following the exact same course, the stock was allocated also a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth, and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.