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Group 1 Automotive (GPI) Q1 Earnings Beat, Revenues Miss

Share price of Group 1 Automotive Inc.GPI increased 7% to $66.37 on Apr 27, after the company reported impressive first-quarter 2016 results. Group 1 Automotive reported an 8.2% year-over-year increase in earnings per share to $1.59 in the first quarter of 2016 that surpassed the Zacks Consensus Estimate by 9 cents. Adjusted net income rose 3.5% to $37.1 million from $35.8 million in the year-ago quarter.

Group 1 Automotive Inc. (GPI) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany

Including net after-tax charges related to insurance deductibles associated with vehicle damage from hailstorms in the U.S. and charges for the divestment of four stores in Brazil in the reported quarter, Group 1 Automotive recorded a net income of $34.3 million or $1.47 per share. In the prior-year quarter, the company recorded a net profit of $35.8 million or $1.47 per share.

Revenues increased 7.2% year over year to $2.61 billion but missed the Zacks Consensus Estimate of $2.63 billion. Revenues benefited from strong performance in the U.K and better used vehicle and service performance in the U.S segment.

Revenues from new vehicle retail sales rose 5.8% to $1.4 billion on a 3.9% increase in unit sales to 40,781 vehicles. Revenues from retailed used vehicles improved 10.4% to $688.2 million on a 9.4% rise in unit sales to 32,791 vehicles. Revenues from used vehicle wholesale sales inched up 1.4% to $101.6 million. Used vehicles' wholesale volume increased 3.1% to 14,366 units.

Revenues from the Parts and Service business improved 9.4% to $308.6 million. The company's Finance and Insurance business witnessed a 5.9% rise in revenues to $100.1 million.

Gross profit increased 6.9% to $389.1 million from $363.9 million in the year-ago quarter. Operating income improved 1.6% to $82 million from $80.7 million in the first quarter of 2015.

Segment Details

Revenues in the U.S. business rose 4.2% to $2.1 billion on the back of better performance in all operations. The segment recorded a 1.2% increase in new vehicle sales to $1.1 billion and an 8% rise in total used vehicles' sales to $627.6 million. Parts and Service revenue increased 8.4%, while Finance and Insurance revenues improved 3.6%.

Revenues in the U.K. business augmented 44.2% to $431.9 million from $299.5 million in the year-ago quarter. Retail new vehicle sales surged 63% to $246.5 million and total used vehicle sales escalated 21.3% to $142.1 million. Parts and Service revenue increased 35%, while Finance and Insurance revenues advanced 56.7%.

Revenues from the Brazil business fell 29.7% to $94.8 million in the reported quarter. New vehicle retail sales decreased 33.3% to $62.9 million, while total used vehicle sales declined 19.5% to $20 million. Parts and Service revenue went down 22.5%, while Finance and Insurance revenues plunged 32.3%.

Financial Details

Group 1 Automotive's cash and cash equivalents increased 71.7% to $22.4 million as of Mar 31, 2016, from $13 million as of Dec 31, 2015. Total debt amounted to $412.7 million as of Mar 31, 2016, compared with $372.3 million as of Dec 31, 2015.

Share Repurchase

During the first quarter of 2016, Group 1 Automotive repurchased 576,230 shares at an average price of $55.44 per share, for a total of $31.9 million. From Mar 31, 2016 through Apr 27, the company repurchased 911,270 shares at an average price of $54.87 per share, for a total of $50 million. As of Apr 27, 2016, the company had $68.1 million remaining under its share repurchase authorization.

Acquisitions & Dispositions

In Feb 2016, Group 1 Automotive completed the acquisition of 15 franchises in the U.K. In Apr 2016, the company acquired 2 franchises in Brazil, including BMW and Toyota, and started operations at the Land Rover and Jaguar open point. These dealerships are expected to boost Group 1 Automotive's revenues by $595 million per annum.

In addition, Group 1 Automotive disposed of a Volkswagen franchise and Toyota franchise in the U.S. From Jan 1, 2016 through Apr 27, the company also disposed of 3 stores in Brazil, including 2 Nissan franchises and a Peugeot franchise. The company also plans to dispose of another Peugeot store later this year. These dealerships generated $110 million in annual revenues.

Zacks Rank

Currently, Group 1 Automotive carries a Zacks Rank #3 (Hold).

Some better-ranked automobile stocks include Lear Corp. LEA , Federal-Mogul Holdings Corporation FDML and Superior Industries International, Inc. SUP . All three stocks sport a Zacks Rank #1 (Strong Buy).

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GROUP 1 AUTO (GPI): Free Stock Analysis Report

SUPERIOR INDS (SUP): Free Stock Analysis Report

LEAR CORPORATN (LEA): Free Stock Analysis Report

FEDERAL MOGUL-A (FDML): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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