GPI

Group 1 Automotive, Inc.

Industrial/Transportation


Presented:01/10/2024
Price:$283.47
Cap:$3.92B
Current Price:$356.87
Cap:$4.78B

Presented

Date01/10/2024
Price$283.47
Market Cap$3.92B
Ent Value$5.99B
P/E Ratio6.24x
Book Value$188.91
Div Yield0.63%
Shares O/S13.82M
Ave Daily Vol127,945
Short Int22.48%

Current

Price$356.87
Market Cap$4.78B
Group 1 Automotive, Inc. engages in the automotive retailing industry. The firm 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: Group 1 Automotive Inc (GPI)

Highlights

The presenter is long shares of Group 1 Automotive Inc (GPI), believing the market underappreciates automotive dealers’ strong history of creating shareholder value and mistakenly lumps them in with more cyclical areas of the automotive industry. For example, in a flattish SAAR environment over 2017 – 2019, GPI grew EPS at a 14% CAGR. Since then, pandemic-related supply chain issues and inflation, among other dynamics, have caused earnings to skyrocket. At the current $280 share price, the stock trades sub-7x consensus 2024 EPS of $40.87 and a mid-teen% FCF yield. This valuation seems low, which she attributes to investor concern regarding GPI overearning in new vehicle GPUs. While she acknowledges that new vehicle GPUs are unsustainably high, she argues that the market is overstating the likely financial impact of GPU normalization and understating offsetting factors. She therefore models EPS of $45 in 2025 assuming continued buybacks, and applies a 12x multiple to reach a price target of $540 per share.

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Idea Discussion

Commentor 1 - 2 weeks ago

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