Group 1 Automotive Inc.
) share price declined 5.8% to $64.86 on Oct 24 and dropped 0.4%
to $64.57 on Oct 25 after the company posted a 9.1% year-on-year
decline in adjusted earnings per share to $1.20 in the third
quarter of 2013. Reported earnings also missed the Zacks
Consensus Estimate by 28 cents.
Meanwhile, net income grew 4.9% to $32.9 million from $31.3
million in the year-ago quarter.
Revenues increased 18.4% year over year to $2.34 billion, beating
the Zacks Consensus Estimate of $2.31 billion. The year-over-year
improvement was driven by strong performances across its business
with higher retail new vehicle sales and better revenues from
Finance and Insurance business.
Revenues from new vehicle sales escalated 21.5% to $1.4 billion
on a 22.5% increase in unit sales to 42,311 vehicles. Revenues
from retailed used vehicles improved 14.6% to $529.8 million on a
16.2% increase in unit sales to 26,059 vehicles.
Revenues from wholesale used vehicles went up 9.4% to $85.8
million. Used vehicles wholesale volume increased 11.6% to 13,445
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Revenues from Parts and Service business increased 13.5% to
$255.3 million. The company's Finance and Insurance business
witnessed an 18.8% rise in revenues to $82.5 million.
Gross profit increased 13.1% to $329.5 million from $291.2
million in the year-ago quarter. Operating income improved 8.8%
to $72.9 million from $67.1 million in the third quarter of 2012.
Revenues in the U.S. business increased 4.1% to $1.9 billion due
to better performance in all operations and a 3.3% increase in
unit sales to 32,661 vehicles. The increase was partially offset
by decrease in used vehicle wholesale volume/revenue.
Revenues in the U.K. augmented 44.7% to $234.9 million from
$162.4 million in the year-ago quarter due to higher new vehicle
retail and used vehicle sales together with better performance by
the Parts and service business. Unit sales improved 60.5% to
4,588 units, benefiting the results of the company.
Revenues from the Brazil business, which was acquired in February
this year, were $215.9 million in the quarter. New vehicle retail
sales were 5,139 units, while total used vehicle sales were 2,255
Group 1's cash and cash equivalents surged to $26.3 million as of
Sep 30, 2013, from $4.7 million as of Dec 31, 2012. Total debt
amounted $255.3 million as of Sep 30, 2013, compared with $263.6
million as of Dec 31, 2012. Debt to capitalization ratio was 20%
versus 23.5% as of Dec 31, 2012.
Group 1 announced a 50% increase in its share repurchase
authorization to $75 million. The company will purchase the
shares from time to time depending on the market conditions,
legal requirements and other corporate considerations. The
company intends to finance this repurchase program using the cash
On Sep 30, 2013, Group 1 Automotive acquired one franchise of
Honda Motor Co., Ltd.
) in Tulsa, OK. Annual revenues from the franchise is estimated
to be $60 million. In the first nine months of 2013, Group 1
Automotive disposed 7 dealerships that generated $318.9 million
in revenues. It also acquired 29 franchises worldwide in the
period, which is expected to generate $967 million annual
Group 1 Automotive is one of the largest automotive retailers in
the U.S., which provides 33 automotive brands. It has 141
automotive dealerships, 179 franchises and 35 collision centers
in the U.S., U.K and Brazil. Currently, the company retains a
Zacks Rank #3 (Hold).
Some other stocks that are performing well in the industry where
Group 1 Automotive operates include
Lithia Motors Inc.
Penske Automotive Group, Inc.
), both carrying a Zacks Rank #2 (Buy).