Critical Comparison: Group 1 Automotive (GPI) versus Its Peers

Group 1 Automotive (NYSE: GPI) is one of 20 public companies in the “Automotive dealers & gasoline service stations” industry, but how does it weigh in compared to its rivals? We will compare Group 1 Automotive to similar businesses based on the strength of its earnings, profitability, valuation, analyst recommendations, institutional ownership, risk and dividends.

Institutional and Insider Ownership

62.1% of shares of all “Automotive dealers & gasoline service stations” companies are held by institutional investors. 6.1% of Group 1 Automotive shares are held by insiders. Comparatively, 16.5% of shares of all “Automotive dealers & gasoline service stations” companies are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Group 1 Automotive and its rivals revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Group 1 Automotive $11.12 billion $213.44 million 8.22
Group 1 Automotive Competitors $8.01 billion $220.42 million 12.00

Group 1 Automotive has higher revenue, but lower earnings than its rivals. Group 1 Automotive is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.

Dividends

Group 1 Automotive pays an annual dividend of $1.04 per share and has a dividend yield of 1.6%. Group 1 Automotive pays out 13.5% of its earnings in the form of a dividend. As a group, “Automotive dealers & gasoline service stations” companies pay a dividend yield of 1.6% and pay out 20.5% of their earnings in the form of a dividend. Group 1 Automotive has increased its dividend for 8 consecutive years. Group 1 Automotive is clearly a better dividend stock than its rivals, given its higher yield and lower payout ratio.

Volatility & Risk

Group 1 Automotive has a beta of 1.75, meaning that its share price is 75% more volatile than the S&P 500. Comparatively, Group 1 Automotive’s rivals have a beta of 9.98, meaning that their average share price is 898% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Group 1 Automotive and its rivals, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Group 1 Automotive 1 7 1 0 2.00
Group 1 Automotive Competitors 115 622 667 29 2.43

Group 1 Automotive presently has a consensus target price of $81.86, indicating a potential upside of 28.89%. As a group, “Automotive dealers & gasoline service stations” companies have a potential upside of 15.94%. Given Group 1 Automotive’s higher possible upside, equities analysts clearly believe Group 1 Automotive is more favorable than its rivals.

Profitability

This table compares Group 1 Automotive and its rivals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Group 1 Automotive 1.89% 15.85% 3.45%
Group 1 Automotive Competitors 3.22% 33.52% 3.60%

Summary

Group 1 Automotive rivals beat Group 1 Automotive on 11 of the 15 factors compared.

About Group 1 Automotive

Group 1 Automotive, Inc., through its subsidiaries, operates in the automotive retail industry. It sells new and used cars, light trucks, and vehicle parts; arranges vehicle financing; sells service and insurance contracts; and provides automotive maintenance and repair services. The company has operations primarily in the metropolitan areas of Alabama, California, Florida, Georgia, Kansas, Louisiana, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, Oklahoma, South Carolina, and Texas in the United States; 28 towns in the United Kingdom; and in the metropolitan markets of Sao Paulo, Parana, Mato Grosso do Sul, and Santa Catarina, Brazil. As of February 15, 2018, it owned and operated 230 franchises, 175 dealership locations, and 48 collision centers that offer 32 brands of automobiles. The company was founded in 1995 and is headquartered in Houston, Texas.

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