Shareholders might have noticed that Group 1 Automotive, Inc. (NYSE:GPI) filed its annual result this time last week. The early response was not positive, with shares down 2.5% to US$269 in the past week. Revenues of US$18b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$42.73, missing estimates by 5.6%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Group 1 Automotive after the latest results.
Following last week's earnings report, Group 1 Automotive's seven analysts are forecasting 2024 revenues to be US$18.1b, approximately in line with the last 12 months. Statutory earnings per share are forecast to dip 7.5% to US$40.64 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$18.1b and earnings per share (EPS) of US$42.45 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
The consensus price target held steady at US$309, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Group 1 Automotive at US$425 per share, while the most bearish prices it at US$200. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Group 1 Automotive's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Group 1 Automotive's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 1.3% growth on an annualised basis. This is compared to a historical growth rate of 10% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.1% annually. Factoring in the forecast slowdown in growth, it seems obvious that Group 1 Automotive is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Group 1 Automotive going out to 2026, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 2 warning signs for Group 1 Automotive you should know about.
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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.