Last week, automotive retailer Group 1 Automotive
Although revenue was up, profits, margins, and comps were down. There is a long road ahead for Group 1, which is virtually a one-stop shop for car buyers, offering sales of new and used vehicles and replacement parts, arranging financing, service, and insurance contracts, and providing maintenance and repair services.
In the quarter, Group 1 earned $17.4 million, or $0.72 per diluted share, down 22%, despite increasing revenue by 7.4% to $1.5 billion. The company incurred charges resulting from lease terminations; without these, profit would have totaled $19.9 million, or $0.82 per share. However, that's still down from last year's performance and short of analysts' expectations.
In an effort to get back on track, Group 1 has begun making adjustments to its vehicle lineup. To counter the slowdown in domestic sales -- Ford's
Despite its obvious struggles, the company comes across as confident that its business is improving, pointing out that after a dismal January, sales rebounded strongly in February and March. However, it may not be quite as confident as it would like investors to believe. Despite the assurances it provided, Group 1 lowered its full-year outlook to a range of $3.75 to $4.05 per diluted share on flat revenue. Then again, it did repurchase 75,000 shares in the quarter.
So, what are investors expected to take away from the automotive retailer's recent news? While I'd like to see some positive results from the recent initiatives at Group 1, its apparent value makes it quite tempting. The stock price is down 19% so far this year, and it now has a trailing P/E of less than 12, which is less than half that of competitor and Inside Value selection CarMax
For more on the performance of automotive retailers, check out:
- Group 1 Automotive Peels Rubber: Fool by Numbers
- The Ride With Group 1 Automotive: Fool by Numbers
- CarMax Crashes?