Results: Group 1 Automotive, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

It's been a pretty great week for Group 1 Automotive, Inc. (NYSE:GPI) shareholders, with its shares surging 14% to US$300 in the week since its latest quarterly results. Revenues were US$4.5b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$10.80 were also better than expected, beating analyst predictions by 17%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Group 1 Automotive

Following the latest results, Group 1 Automotive's seven analysts are now forecasting revenues of US$18.8b in 2024. This would be a satisfactory 3.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to shrink 9.6% to US$39.51 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$18.9b and earnings per share (EPS) of US$38.85 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of US$321, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Group 1 Automotive analyst has a price target of US$425 per share, while the most pessimistic values it at US$255. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Group 1 Automotive's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 4.2% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. Compare this to the 146 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.9% per year. Factoring in the forecast slowdown in growth, it looks like Group 1 Automotive is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Group 1 Automotive analysts - 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 1 warning sign 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.