I'm not sure how it did it, but Group 1 Automotive (NYSE:GPI) somehow managed to perform at a lower level than a year ago in so many metrics, yet its stock price jumped nearly 7% after its earnings news Tuesday. Actually, I have some idea about how it achieved such an impressive feat: estimates. Want more words? Keep reading.

Before we get to the estimates, let's look at the results. For the second quarter, Group 1 -- which sells cars and parts and offers financial services and repairs -- reported revenue of $1.7 billion, up 7.9% from a year ago. That certainly seems good; perhaps that's why investors reacted so positively? Not so fast. On a same-store basis, revenue actually fell 2.3% because new, used retail, and used wholesale sales were all lower. Net profit slipped 2.6% to $24.2 million, but earnings per share edged up 1% because the company repurchased more than 321,000 shares, leaving fewer outstanding.

Analysts had expected Group 1 to earn $0.98 per share on sales of $1.6 billion. Further, the company stuck to its full-year guidance, projecting earnings of $3.75 to $4.05 per share in a challenging environment. Does the fact that it topped analysts' estimates and left unchanged forward estimates it had just lowered last quarter really justify a 7% increase in its stock price? I don't think so.

There are actually several reasons for the excitement generated by Group 1's results, including its diverse product mix, which is heavy on popular imports, and its ability to avoid some of the rubble from the falling housing market. However, perhaps the primary reason behind the company's rise seems to be its bargain-basement price. Group 1 had already been pushed to new lows recently, and its valuation became very attractive. Therefore, any bit of good news was expected to be rewarded. Even after Tuesday's rise, Group 1 has a forward P/E that is just around 10, based on its estimates. That's lower than competitors AutoNation (NYSE:AN) and Motley Fool Inside Value selection CarMax (NYSE:KMX).

We'll have to see how long Group 1 can continue to perform at a respectable level while the market remains difficult. So far, its business outside the housing market's hardest-hit areas and improvements in its parts and service and finance and insurance areas have enabled the company to perform well. If it can continue to do so, it may just have plenty of gas left in the tank to get past the dangerous road ahead.

For more on Group 1's impressive handling, check out:

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Fool contributor Mike Cianciolo welcomes feedback and doesn't own any of the companies in this article. The Fool has a disclosure policy.