Group 1 Automotive (GPI) Q2 Earnings Miss On Lower Sales

Group 1 Automotive Inc. (NYSE:GPI) reported adjusted earnings per share of $1.87 in second-quarter 2017, missing the Zacks Consensus Estimate of $1.99.

On a reported basis, Group 1 Automotive recorded net income of $39.1 million or $1.84 per share. In the prior-year quarter, the company registered net income of $46.6 million or $2.12 per share.

Revenues decreased 4% year over year to $2.67 billion and came almost in line with the Zacks Consensus Estimate.

Revenues from new vehicle retail sales declined 6% to $1.45 billion due to a 6.3% decrease in unit sales. Revenues from retailed used vehicles decreased 4.2% to $685.9 million on a 2.9% decline in unit sales. Revenues from used vehicle wholesale sales increased 3.2% to $99.4 million.

From the Parts and Service business, revenues improved 4.5% to $282.7 million. The company’s Finance and Insurance business witnessed a 1.7% fall in revenues to $94.6 million.

Gross profit decreased 1.3% year over year to $404.9 million. Operating income declined 5.3% to $92.2 million.

Segment Details

Revenues in the U.S. business fell 3.8% to $2.1 billion. The segment recorded a 4.9% decrease in new vehicle retail sales to $1.1 billion and a 5.4% decline in total used vehicles’ retail sales to $602.7 million. Parts and Service revenue increased 4.5%, while Finance and Insurance revenues declined 3.8%.

Revenues in the U.K. business declined 6.6% year over year to $437.1 million. Retail new vehicle sales dropped 11.7% to $231.4 million and total used vehicle sales grew 1.7% to $158.9 million. Parts and Service revenue decreased 7.3%, while Finance and Insurance revenues advanced 1.7%.

Revenues from the Brazil business rose 3.8% year over year to $111.4 million in the reported quarter. New vehicle retail sales declined 2.4% to $73.6 million, while total used vehicle sales increased 28.5% to $23.8 million. Parts and Service revenues increased 2.4%, while Finance and Insurance revenues grew 23%.

Financial Details

Group 1 Automotive’s cash and cash equivalents increased to $26.6 million as of Jun 30, 2017 from $21 million as of Dec 31, 2016.

Share Repurchases

During second-quarter 2017, Group 1 Automotive repurchased 629,298 or around 3% of the outstanding shares. As of Jun 30, 2017, the company had $50.7 million remaining under the share repurchase authorization.

Acquisitions

During second-quarter 2017, the company acquired its first Jaguar and Land Rover dealerships in the U.S., located in Albuquerque and Santa Fe, New Mexico.

In April, Group 1 Automotive opened Cedar Park Nissan in Austin, TX, which has expected annualized revenue of $30 million.

Also, in July 2017, the company acquired Beadles Group Ltd in the U.K., which expands the dealership footprint in the region to 43 stores. This is expected to fetch annual revenues of $330 million.

Zacks Rank & Key Picks

Group 1 Automotive currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked companies in the auto space are Allison Transmission Holdings (NYSE:ALSN) , Volkswagen (DE:VOWG_p) AG (OTC:VLKAY) and Daimler AG (OTC:DDAIF) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has expected long-term growth rate of 11%.

Volkswagen has expected growth rate of around 17.3% in the long run.

Daimler has expected long-term growth rate of 2.8%.

Group 1 Automotive, Inc. Price, Consensus and EPS Surprise

Group 1 Automotive, Inc. Price, Consensus and EPS Surprise | Group 1 Automotive, Inc. Quote

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