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How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in Group 1 Automotive (GPI) ten years ago? It may not have been easy to hold on to GPI for all that time, but if you did, how much would your investment be worth today?
Group 1 Automotive's Business In-Depth
With that in mind, let's take a look at Group 1 Automotive's main business drivers.
Group 1 Automotive, Inc. is one of the leading automotive retailers in the world, with operations primarily located in the United States and the UK. As of Dec 31, 2021, the company's retail network consisted of 147 and 55 dealerships in the United States and the U.K., respectively. Through these dealerships, the firm sells new and used cars and light trucks. Apart from selling new and used vehicles, the company offers vehicle financing and insurance and service contracts. Further, it provides maintenance and repair services, along with sale of replacement parts and aftermarket automotive products.
The core brands of vehicles sold by Group 1 Automotive are Toyota/Lexus, BMW, Honda, Ford, Nissan, General Motors, Chrysler, Volkswagen/Audi/Porsche, Mercedes-Benz, Nissan, Jaguar and Hyundai.
In 2021, New Vehicle represented 48%; Used Vehicle contributed 36%; Service and Parts accounted for 12%; and Finance & Insurance represented 4% to the company’s total revenues.
In November, Group 1 announced the divestment plans of its Brazilian operations. Until the closure of its Brazilian operations, which is scheduled in the second quarter of 2022, operating results from the same will be reported as discontinued operations and excluded from continuing operations. Group 1 will, henceforth, not report Brazil as a separate segment and will only report the U.S. and U.K. segments.
Thus, the company currently operates through two reportable segments — the United States and the United Kingdom. In the United States, the major metropolitan areas in which the company has presence are — Alabama, California, Florida, Georgia, Kansas, Louisiana, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, Maine, Oklahoma, South Carolina and Texas.
The firm’s online retail platform, AcceleRide, which was deployed to all the U.S. dealerships in 2019, allows for a comprehensive shopping experience to the customers. The customer also has the ability to apply for financing and review and select F&I products as part of the online process.
Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in Group 1 Automotive ten years ago, you're likely feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in March 2012 would be worth $3,356, or a 235.60% gain, as of March 2, 2022. Investors should keep in mind that this return excludes dividends but includes price appreciation.
The S&P 500 rose 213.39% and the price of gold increased 9.19% over the same time frame in comparison.
Analysts are anticipating more upside for GPI.
Shares of Group 1 have handily outperformed the auto sector over the past year. Group 1’s diversified product mix along with omnichannel efforts bode well. Acquisitions of dealerships and franchises to expand and optimize its portfolio are major tailwinds. In 2021, the auto retailer completed transactions representing $2.5 billion of acquired revenues. Buyout of Prime Automotive and Robinsons Group have bolstered prospects. The AcceleRide platform, its online retailing initiative, active at most of the firm’s U.S. dealerships is also likely to aid Group 1’s long-term prospects. Further, the company’s continued cost discipline is driving margins. Solid cash flow generation and dividend hikes boost shareholders’ confidence. As such, Group 1 is viewed as an attractive bet for the time being.
Over the past four weeks, shares have rallied 5.84%, and there have been 3 higher earnings estimate revisions in the past two months for fiscal 2022 compared to none lower. The consensus estimate has moved up as well.
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Group 1 Automotive, Inc. (GPI) : Free Stock Analysis Report
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