Best Estimates Group 1 Earnings (GPI) in Q4, Sales Increase Year-over-Year

Group 1 Automotive GPI reported adjusted earnings per share of $9.43 in the fourth quarter of 2021, beating Zacks’ consensus estimate of $9.06. The outperformance can be attributed to higher-than-expected gross profit from the company’s new-vehicle and used-vehicle retail segments. Net income increased from $5.66 per share in the prior year quarter, marking a growth of 66.6%.

The auto retailer posted net sales of $3,489.6 million, slightly beating Zacks’ consensus estimate of $3,478.8 million. Additionally, revenue increased 16.7% from $2,990.2 million in the prior year quarter.

Fourth Quarter Highlights

Retail of new vehicles sales increased 8% from year-ago quarter levels to $1,676.2 million. The figure missed Zacks’ consensus estimate of $1.680 million. The unit’s gross profit totaled $194 million, up 91.5% year-over-year. The reported profit figure also exceeded the consensus mark of $155 million.

Retail of used vehicles sales increased 40.9% from the same period a year ago to $1,136.6 million. Revenue also exceeded the consensus mark of $917 million. The unit’s gross profit was $90.6 million, jumping 89% year-over-year. The reported profit figure also exceeded the consensus mark of $80 million.

Wholesale of used vehicles sales climbed 5.6% from the corresponding quarter last year to $87.7 million, but missed the $97 million mark. Used vehicle wholesale gross profit was $4.8 million, compared to $1.7 million a year earlier. The reported figure, however, missed the consensus mark of $8.7 million.

In the Parts and service company, revenue increased 24.5% from year-ago quarter levels to $439 million. Revenue topped Zacks’ consensus estimate of $437 million. Gross profit for the segment was $232.2 million, up 20.5% year-over-year, but missing the consensus mark of $240 million.

The income from the Finance and Insurance activity improved 17.6% from year-ago period levels to $150.1 million, surpassing the consensus mark of $132 million. Segment gross profit was $150 million, ahead of the consensus mark of $132 million.

Segments in detail

For the current quarter, revenue for the US business segment increased 18% year-on-year to $2,854.7 million. The segment’s gross profit also increased 42.8% year-over-year to $578.1 million. In the current quarter, retail sales of new vehicles, retail used vehicles and wholesale used vehicles were 29,028, 29,266 and 4,986, respectively.

During the reporting period, revenue increased 26.5% year-over-year to $634.9 million for the UK business segment. Additionally, gross profit totaled $93.1 million, up 40.6% from the fourth quarter of 2020. In the current quarter, units of retail new vehicles, used vehicles in retail and wholesale used vehicles sold were 6,545, 8,032 and 3,232, respectively. .

During the quarter, the company announced plans to divest its Brazilian operations. Until the closure of its Brazilian operations, expected in the second quarter of 2022, the operating results of these operations will be presented as discontinued operations and excluded from continuing operations. Group 1 will now not feature Brazil as a separate segment and will only feature the US and UK segments.

Financial situation

Group 1 Automotive had cash and cash equivalents of $14.9 million as of December 31, 2021, down from $69 million in the corresponding period of 2020. Total debt was 2,035, $7 million as of December 31, 2021, up significantly from the $1,336.6 million recorded in the comparable period of 2020.

During the current quarter, GPI repurchased 978,348 shares at an average price of $196.20 per common share for a total of $191.9 million. As of December 31, 2021, the company had 17.2 million common shares outstanding.

Zacks ranking and other key picks

Currently, Group 1 has Zacks Rank #2 (Buy).

Some other top ranked players in the automotive space are Goodyear tire GT and You’re here TSLA, each sporting a Zacks rank #1 (Strong Buy) and Authentic parts GPC, currently wearing a #2 Zacks rank. You can see the full list of today’s Zacks #1 Rank stocks here.

Goodyear forecasts a 51.7% profit growth rate for the current year. The Zacks consensus estimate for current-year earnings has been revised up about 1.1% in the past 60 days.

Goodyear’s earnings have exceeded Zacks’ consensus estimate for the past four quarters. GT realized a surprise on earnings for the last four quarters of 228.5% on average. The title also rebounded 51.8% over one year.

Tesla has an expected profit growth rate of 35.21% for the current year. The Zacks consensus estimate for current-year earnings has been revised up about 5% in the past 60 days.

Tesla’s earnings have exceeded Zacks’ consensus estimate in three of the past four quarters. TSLA has realized a surprise on earnings for the last four quarters of 25.38% on average. The title also rebounded by 11.5% over one year.

Genuine Parts has an expected earnings growth rate of 10.03% for the current year. The Zacks consensus estimate for current-year earnings has been revised up about 2.2% in the past 60 days.

Genuine Parts’ earnings have exceeded Zacks’ consensus estimate for the past four quarters. GPC has realized an earnings surprise for the past four quarters of around 16% on average. The title also rebounded 26.8% over one year.

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