Group 1 Automotive, Inc. Just Missed EPS By 5.6%: Here's What Analysts Think Will Happen Next

Last week, you might have seen that Group 1 Automotive, Inc. (NYSE:GPI) released its yearly result to the market. The early response was not positive, with shares down 2.5% to US$268 in the past week. It looks like the results were a bit of a negative overall. While revenues of US$18b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 5.6% to hit US$42.73 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Group 1 Automotive

Taking into account the latest results, Group 1 Automotive's three analysts currently expect revenues in 2024 to be US$17.9b, approximately in line with the last 12 months. Statutory earnings per share are expected to fall 10% to US$40.64 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$18.1b and earnings per share (EPS) of US$42.45 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

The consensus price target held steady at US$318, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Group 1 Automotive, with the most bullish analyst valuing it at US$455 and the most bearish at US$200 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Group 1 Automotive's revenue growth is expected to slow, with the forecast 0.4% annualised growth rate until the end of 2024 being well below the historical 10% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.3% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Group 1 Automotive.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Group 1 Automotive's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Group 1 Automotive going out to 2026, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 2 warning signs for Group 1 Automotive you should be aware of.

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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.