GPI

Group 1 Automotive, Inc.

Industrial/Transportation


Presented:07/08/2020
Price:$67.27
Cap:$1.22B
Current Price:$356.87
Cap:$4.78B

Presented

Date07/08/2020
Price$67.27
Market Cap$1.22B
Ent Value$4.15B
P/E Ratio7.67x
Book Value$64.63
Div Yield1.29%
Shares O/S18.18M
Ave Daily Vol302,128
Short Int21.85%

Current

Price$356.87
Market Cap$4.78B
Group 1 Automotive, Inc. engages in the automotive retailing industry. It operates through the following geographical segments: U.S, the UK, and Brazil. It also sells new and used cars and light trucks, arranges related vehicle financing, sells service contracts, provides automotive maintenance and repair services, and sells vehicle parts. The company was founded in 1995 and is headquartered in Houston, TX.

Publicly traded companies mentioned herein: Asbury Automotive Group Inc (ABG), Group 1 Automotive Inc (GPI)

Highlights

The presenter is bullish on automotive dealers, which he views as fantastic businesses that are misunderstood by the market. Bearish investors point to a shrinking topline driven by SAAR (car sales generally represent 80%+ of revenue) and high leverage figures; in his opinion, this perspective is flawed. Car sales generate single-digit gross profit margins, of which ~75% goes to SG&A expenses (sale, advertising, etc.). Since these expenses are mostly related to car sales, auto dealers can flow almost all of their 50%+ gross margins from parts and services (P&S) to the bottom line (i.e., the parts and services segment is the main profit driver). Because of the bad optics of these businesses, automotive dealer stocks have perpetually traded at cheap multiples. The presenter is fine with the low multiples because these companies then buy back shares at cheap rates, allowing earnings to compound at 20% – 30% annually. 

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Idea Discussion

Commentor 1 - 2 weeks ago

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