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

It's been a good week for Group 1 Automotive, Inc. (NYSE:GPI) shareholders, because the company has just released its latest quarterly results, and the shares gained 10.0% to US$333. It looks like a credible result overall - although revenues of US$4.7b were in line with what the analysts predicted, Group 1 Automotive surprised by delivering a statutory profit of US$10.17 per share, a notable 12% above expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Group 1 Automotive

Following the latest results, Group 1 Automotive's six analysts are now forecasting revenues of US$19.1b in 2024. This would be a modest 4.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dip 2.5% to US$40.63 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$19.5b and earnings per share (EPS) of US$38.98 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of US$345, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Group 1 Automotive analyst has a price target of US$435 per share, while the most pessimistic values it at US$260. 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.

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 8.3% annualised growth rate until the end of 2024 being well below the historical 12% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.8% per year. Even after the forecast slowdown in growth, it seems obvious that Group 1 Automotive is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Group 1 Automotive following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Group 1 Automotive analysts - going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 2 warning signs we've spotted with Group 1 Automotive (including 1 which is potentially serious) .

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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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