Group 1 Automotive (GPI): Assessing Valuation After Analyst Upgrades and Continued Expansion

If you are watching Group 1 Automotive (GPI) right now, there is a fresh set of earnings revisions and a number of business updates to consider. In just the past few weeks, analysts have increased their profit expectations for 2025, reflecting growing confidence in the company’s operational strategy. At the same time, Group 1’s ongoing dealership expansion, including its new Mercedes-Benz of South Austin property, and a steady, higher dividend suggest the business is taking a balanced approach to growth and shareholder returns.

This combination of upwardly revised forecasts and real-world execution has helped Group 1 shares rise 13% over the past month, with year-to-date returns near 13% and a total of 28% over the past year. While momentum appears to be building, these moves come after several quarters of consistent growth, which have included new leadership appointments and strategic investments in both facilities and personnel.

After this strong run, some investors may be asking whether Group 1 Automotive represents an undervalued growth story or if the market has already priced in its next phase of expansion.

Most Popular Narrative: 1.7% Undervalued

According to community narrative, Group 1 Automotive is viewed as modestly undervalued based on analyst consensus, with future earnings and profitability improvements driving a higher fair value estimate.

The sustained growth in the high-margin parts & service (aftersales) segment, driven by an aging vehicle fleet and rising average vehicle age in both the U.S. and U.K., positions Group 1 to capitalize on increasing repair and maintenance needs. This trend is expected to continue to expand recurring revenue and bolster margins.

Want to uncover why analysts see higher profits around the corner? The most surprising driver behind this valuation is hiding in plain sight. Is it steady growth, margin gains, or the impact of new business strategies? Find out what analysts are really banking on and see what could set Group 1 apart from its peers.

Result: Fair Value of $478.25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising competition from digital auto retailers and the risk of integration missteps from acquisitions could present challenges to Group 1's growth strategy in the future.

Find out about the key risks to this Group 1 Automotive narrative.

Another View: Our DCF Model Results

Looking at Group 1 Automotive through the lens of our DCF model tells a different story. The shares appear overvalued according to this cash flow-based approach. Why does this model diverge from the analyst consensus? Which approach provides a closer reflection of reality?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Group 1 Automotive for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Group 1 Automotive Narrative

If the current analysis does not match your perspective or you like to take a hands-on approach, you have the option to craft your own narrative in just a few minutes. do it your way.

A great starting point for your Group 1 Automotive research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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