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Will Group 1 Automotive (GPI) Beat Q3 Earnings Estimates? - Analyst Blog

Group 1 Automotive Inc. ( GPI ) is set to report its third-quarter 2014 results on Oct 23. In the last quarter, the company had posted an earnings surprise of -9.82%. Let's see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Group 1 Automotive is likely to beat earnings this season because it has the right combination of two key ingredients.

Zacks ESP:Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +1.39%. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.

Zacks Rank: Group 1 Automotive currently carries a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank of #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

Group 1 Automotive's Zacks Rank #3 and positive ESP make us reasonably confident of a positive earnings beat.

What is Driving the Better-than-Expected Earnings?

Group 1 Automotive has been undertaking various acquisitions to boost sales and earnings. In September, the company acquired a Mercedes-Benz dealership in Campo Grande, capital of the Brazilian state of Mato Grosso do Sul. This dealership will be the sole Mercedes-Benz dealership in the area. In August, Group 1 Automotive acquired a Mercedes-Benz dealership in Boerne, TX. Group 1 expects the dealership to generate annual revenues of approximately $135 million.

In the second quarter, Group 1 Automotive redeemed a large portion of 3.00% Convertible Senior Notes as it announced mandatory redemption of 2.25% Convertible Senior Notes. This initiative reduced the share count of the company by 2.2 million shares, which will have a positive effect on earnings per share in the third quarter.

Stocks to Consider

Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

American Axle & Manufacturing Holdings Inc. ( AXL ) has an Earnings ESP of +4.6% and a Zacks Rank #3. The company will report its third-quarter 2014 results on Oct 31.

Meritor, Inc. ( MTOR ) has an Earnings ESP of +37.5% and a Zacks Rank #3. The company will release its third-quarter numbers on Nov 12.

Advance Auto Parts Inc. ( AAP ) has an Earnings ESP of +0.54% and a Zacks Rank #2 (Buy). The company's third-quarter results are scheduled to release on Nov 6.

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GROUP 1 AUTO (GPI): Free Stock Analysis Report

AMER AXLE & MFG (AXL): Free Stock Analysis Report

ADVANCE AUTO PT (AAP): Free Stock Analysis Report

MERITOR INC (MTOR): 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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