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Group 1 Automotive (GPI)
NYSE:GPI
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Group 1 Automotive
(NYSE:GPI)
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Rating:62Neutral
Price Target:
$318.00
▲(0.54% Upside)
Action:ReiteratedDate:02/14/26
The score is driven primarily by solid but weakening fundamentals (strong revenue growth offset by significant margin and earnings compression, plus leverage and cash-flow volatility). Technicals are the main drag given a clear downtrend despite oversold readings. Valuation is reasonable on P/E but provides limited support due to a low dividend yield, while the earnings call and dividend increase add a moderately positive tone on cash generation and capital allocation despite UK and GPU headwinds.
Positive Factors
Record Revenue & Volumes
Sustained top-line scale and record unit volumes underpin structural revenue resilience across cycles. Higher gross profit and volume diversity (new + used) improve bargaining with OEMs and support operational leverage, making revenue generation less dependent on short-term market swings.
Aftersales Strength
A large, growing parts & service business delivers recurring high-margin revenue tied to installed vehicle parc. Rising technician headcount and record aftersales gross profit indicate durable cashflow, higher customer retention, and margin stability versus cyclical new-vehicle sales.
Cash Generation & Capital Returns
Strong operating and free cash flow in 2024–25 funds buybacks, dividends, and targeted acquisitions without solely relying on debt. Consistent cash conversion enables disciplined capital allocation and supports balance sheet repair, making the business more resilient to retail cyclicality.
Negative Factors
Margin Compression
Material margin erosion from ~4.6% (2022) to ~1.4% (2025) signals weaker earnings power even with higher revenue. Structural margin pressures—FGP moderation, higher SG&A and GPU compression—reduce free cash flow sensitivity and long-term return on invested capital.
Elevated Leverage
Leverage above target constrains strategic flexibility in a cyclical sector requiring working capital for inventory. Higher debt multiples increase refinancing and interest risk, limiting ability to pursue acquisitions or absorb extended margin downturns without slowing buybacks or other returns.
UK Structural Headwinds
Persistent UK macro and industry shifts (BEV mandates, new OEM entrants) and ongoing restructuring mean protracted execution risk. Declining UK GPUs and volumes require sustained operational fixes and may weigh on aggregate margins and returns for multiple quarters.
Group 1 Automotive (GPI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.77B
Dividend Yield0.49%
Average Volume (3M)160.91K
Price to Earnings (P/E)15.8
Beta (1Y)0.82
Revenue Growth19.45%
EPS Growth-24.27%
CountryUS
Employees20,413
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Dealerships
Share Statistics
EPS (TTM)8.49
Shares Outstanding11,925,199
10 Day Avg. Volume150,371
30 Day Avg. Volume160,914
Financial Highlights & Ratios
PEG Ratio-0.50
Price to Book (P/B)1.82
Price to Sales (P/S)0.22
P/FCF Ratio11.95
Enterprise Value/Market Cap2.61
Enterprise Value/Revenue0.44
Enterprise Value/Gross Profit2.81
Enterprise Value/Ebitda11.50
Forecast
1Y Price Target
$434.00Price Target Upside37.21% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
EPS Forecast (FY)42.11
Revenue Forecast (FY)$23.19B
Group 1 Automotive Business Overview & Revenue Model
Company DescriptionGroup 1 Automotive, Inc., through its subsidiaries, operates in the automotive retail industry. The company sells new and used cars, light trucks, and vehicle parts, as well as service and insurance contracts; arranges related vehicle financing; and offers automotive maintenance and repair services. It operates primarily in 17 states in the United States; and 35 towns in the United Kingdom. As of July 11, 2022, the company owned and operated 204 automotive dealerships, 273 franchises, and 47 collision centers that offer 35 brands of automobiles. Group 1 Automotive, Inc. was incorporated in 1995 and is based in Houston, Texas.
How the Company Makes MoneyGPI generates revenue through multiple dealership-based streams. (1) New vehicle sales: It sells new vehicles as a franchised dealer for various automotive manufacturers; revenue is recorded as the retail selling price, with gross profit driven by the spread between vehicle selling price and the dealer’s cost (including manufacturer programs and incentives where applicable). (2) Used vehicle sales: It acquires used inventory via trade-ins, auctions, and other sourcing channels and sells those vehicles at retail; profitability depends on sourcing costs, reconditioning expense, pricing discipline, and inventory turnover. (3) Aftersales (Parts & Service): Its service departments perform maintenance and repair work and its parts departments sell parts to retail and internal customers; this segment typically includes customer-pay work, warranty work reimbursed by manufacturers, and internal work related to preparing vehicles for sale. (4) Finance & Insurance (F&I): When customers finance or lease a vehicle, GPI often arranges the transaction with third-party lenders and earns fees/commissions and may sell additional products such as vehicle service contracts, GAP coverage, and other protection products; earnings are influenced by unit volume, lender terms, and product attachment rates. Key factors supporting these revenue streams include ongoing relationships with OEMs via franchise agreements (which enable new-vehicle supply and warranty reimbursement), access to third-party finance partners for retail lending/leasing, and the recurring nature of parts and service demand from the vehicle parc served by its dealerships.
Group 1 Automotive Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Positive
The call presented a largely positive operating and financial picture: record full-year revenues and gross profits, strong parts & service and F&I performance, robust cash generation, and active capital allocation (including sizable buybacks and targeted acquisitions). Offsetting these positives are concentrated challenges in the UK (volume and GPU pressure, competition and restructuring), moderation in vehicle GPUs (especially in luxury and used segments), some impairment charges, and near-term SG&A and leverage headwinds. Overall, the positives (record results, cash flow, operational improvements and clear remediation actions) outweigh the localized and addressable negatives, but the UK execution and GPU trends are watch points for 2026.Q4-2025 Updates
Positive Updates
Record Full-Year Results and Volumes
Recorded all-time high full-year gross profit of more than $3.6 billion and sold a record 459,000 new and used vehicles in 2025.
Strong Reported Financials
Reported 2025 revenue of $5.6 billion, gross profit of $874 million (reported), adjusted net income of $105 million, and adjusted diluted EPS of $8.49 from continuing operations.
Record Parts & Service Performance
Full-year parts and service gross profit reached nearly $1.6 billion; aftersales growth stood out, with technician counts up (U.S. same-store technicians +2.3% YoY; UK same-store technicians +9.5% YoY) and improved customer pay performance (UK customer pay revenue +9% YoY).
F&I Improvement and Virtual Adoption
F&I PRU in the UK increased ~13% (or $123) and F&I GPUs grew nearly 3% in the quarter (roughly $67 reported / $65 same-store), supported by broader adoption of virtual finance operations and higher product penetrations.
Used Vehicle Revenue Strength (U.S.)
Used vehicle revenues in the U.S. increased approximately 41% on an as-reported and same-store basis, aided by disciplined sourcing and operational flexibility.
Strong Cash Generation and Capital Allocation
Generated $699 million of adjusted operating cash flow and $494 million of free cash flow after $205 million of CapEx; repurchased >10% of outstanding shares in 2025 (~1.3M shares for $555M) and repurchased additional shares ($28.3M) post-quarter; $350M remaining on authorization.
Strategic Portfolio Actions and Acquisitions
Completed targeted acquisitions in the U.S. and UK expected to add ~ $40 million of annual revenue, disposed of 13 dealerships (32 franchises) representing ~ $775 million of annualized revenue to reshape portfolio, and completed UK systems integration and contact center consolidation (10->2) to drive operational consistency.
Liquidity and Leverage
Liquidity of $883 million (cash $537M + $346M available on acquisition line) with rent-adjusted leverage of 3.1x at December and an expressed goal to move leverage below 3x.
Negative Updates
Challenging UK Macro Environment
UK faced weak economic growth, persistent inflation, increased competition from Chinese OEMs and BEV mandate margin pressure; resulting actions included UK headcount reductions of 537 positions in 2025 and ongoing restructuring and exit of select OEM sites (e.g., JLR).
UK New Vehicle and Used GPU Pressure
UK same-store new vehicle volumes declined 8.2% YoY and local-currency GPUs moderated ~3.2%, producing an ~11% decline in local-currency same-store new revenues; used vehicle same-store GPUs fell ~19% YoY despite used revenues up ~9% and volumes up ~8%.
Moderation in New Vehicle GPUs and Luxury Segment Softness
New vehicle GPUs moderated from post-pandemic highs (U.S. new vehicle PRU moderated by $62 sequentially) with notable softness in the luxury segment, contributing to lower quarter-over-quarter GPU performance.
Used Vehicle GPU Compression (U.S.)
U.S. used vehicle GPUs declined approximately 8% on a same-store basis, reflecting higher acquisition costs for used inventory despite flat volumes.
SG&A Pressure
U.S. adjusted SG&A as a percent of gross profit increased 200 basis points sequentially to 67.8%, driven primarily by higher employee expenses; UK incurred modest nonrecurring restructuring costs during the quarter.
Impairments and Market-Specific Challenges
Annual impairments taken in Q4 were primarily in the U.S., notably within the Audi brand and an underperforming Maryland/DC market; prior-quarter impairments had been UK weighted.
Leverage Slightly Above Stated Target
Reported rent-adjusted leverage of 3.1x (above the company's stated preference to be below 3x), indicating room to reduce leverage or adjust allocation priorities.
Ongoing Restructuring Timeline Uncertainty
Management indicated UK turnaround is in the 'earlier innings' with more work expected in 2026; restructuring benefits partially realized but additional actions remain and timing of full benefit is uncertain.
Company Guidance
Management guided that they will continue disciplined capital allocation and operational execution after reporting 2025 results that included full‑year revenues of $5.6 billion, an all‑time high gross profit of >$3.6 billion (including record parts & service gross profit of nearly $1.6 billion), 459,000 vehicles sold, adjusted net income of $105 million and adjusted diluted EPS of $8.49; liquidity of $883 million (cash $537M, $346M available on the acquisition line), rent‑adjusted leverage of 3.1x with an objective to stay below 3x, $699M of adjusted operating cash flow and $494M of free cash flow after $205M of CapEx. They expect near‑term capital deployment to include acquisitions (recent deals expected to add ~ $40M of annual revenue and $640M of revenues acquired through Dec. 31), continued dispositions (13 dealerships/32 franchises that generated ≈$775M of annualized revenue), and ongoing buybacks (≈1.3M shares repurchased for ~$555M at an average $413.05, plus 71,750 shares for $28.3M at $394.20, with ~$350M remaining on the authorization). Operational priorities and targets include holding U.S. SG&A below pre‑COVID levels (roughly mid‑ to high‑60% of gross profit annually), targeting UK SG&A around 80% of gross profit, and driving UK improvements from restructuring (technician headcount +9.5%, RO count +36%, same‑store F&I PRU $1,060 with PRU up ~13% or ~$123) while addressing used‑vehicle GPU pressures (U.S. used revenues +~41% year‑over‑year but used GPUs down ~8% same‑store) and modest F&I GPU growth (≈3%, or roughly $65–$67).Group 1 Automotive Financial Statement Overview
Summary
Strong multi-year revenue growth, but profitability has cooled meaningfully with net income down from 2022–2025 and net margin compressing to ~1.4% in 2025. Balance sheet leverage remains elevated (debt above equity), though improving in 2025, and cash flow is positive recently but has shown volatility (including negative FCF in 2023).Income Statement
Revenue has grown consistently from 2021–2025, with 2025 up ~15% year over year, showing solid top-line momentum. However, profitability has clearly cooled: net income declined from 2022–2025 and net margin compressed materially (about 4.6% in 2022 to about 1.4% in 2025), alongside weaker operating profitability versus prior years. Overall: strong sales trajectory, but pressured earnings power and margin volatility are notable risks.72
Positive
Balance Sheet
Leverage is meaningful, with debt running above equity across the period (debt-to-equity generally ~1.3x–1.8x), which reduces financial flexibility in a cyclical retail/auto environment. A positive offset is that leverage improved in 2025 versus 2024 (debt down and debt-to-equity lower), and returns on equity remain positive, though they have trended down from the peak years as profitability softened. Overall: acceptable but leveraged balance sheet with improving trend, yet still higher-risk positioning.60
Neutral
Cash Flow
Cash generation is generally healthy in recent years: operating cash flow and free cash flow are positive in 2024–2025, and free cash flow covered a meaningful portion of net income (~58%–61%). The main weakness is volatility—2023 saw negative free cash flow and very weak cash conversion, and 2025 free cash flow declined versus 2024 (negative growth). Overall: decent current cash flow profile, but consistency and durability are concerns.64
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 22.57B | 19.93B | 17.87B | 16.22B | 13.48B |
| Gross Profit | 3.50B | 3.24B | 3.02B | 2.97B | 2.44B |
| EBITDA | 855.40M | 1.02B | 1.06B | 1.18B | 963.20M |
| Net Income | 321.50M | 498.20M | 601.60M | 751.50M | 552.10M |
Balance Sheet | |||||
| Total Assets | 10.35B | 9.82B | 7.77B | 6.72B | 5.75B |
| Cash, Cash Equivalents and Short-Term Investments | 32.50M | 34.40M | 57.20M | 47.90M | 14.90M |
| Total Debt | 5.87B | 5.24B | 3.89B | 3.35B | 2.85B |
| Total Liabilities | 7.56B | 6.85B | 5.10B | 4.48B | 3.92B |
| Stockholders Equity | 2.79B | 2.97B | 2.67B | 2.24B | 1.83B |
Cash Flow | |||||
| Free Cash Flow | 424.50M | 341.20M | -121.90M | 430.40M | 1.12B |
| Operating Cash Flow | 694.50M | 586.30M | 63.50M | 585.90M | 1.26B |
| Investing Cash Flow | -671.30M | -1.28B | -366.10M | -484.60M | -1.25B |
| Financing Cash Flow | -31.10M | 681.10M | 311.90M | -67.30M | -74.00M |
Group 1 Automotive Technical Analysis
Negative
316.30
Price Trends
351.02
Negative
375.82
Negative
408.99
Negative
Market Momentum
-13.45
Positive
36.03
Neutral
22.39
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GPI, the sentiment is Negative. The current price of 316.3 is below the 20-day moving average (MA) of 319.83, below the 50-day MA of 351.02, and below the 200-day MA of 408.99, indicating a bearish trend. The MACD of -13.45 indicates Positive momentum. The RSI at 36.03 is Neutral, neither overbought nor oversold. The STOCH value of 22.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GPI.
Group 1 Automotive Risk Analysis
Group 1 Automotive disclosed 24 risk factors in its most recent earnings report. Group 1 Automotive reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Group 1 Automotive Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
62 Neutral | $3.77B | 15.78 | 10.85% | 0.49% | 19.45% | -24.27% | |
62 Neutral | $3.64B | 9.17 | 9.29% | ― | 8.07% | 60.95% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
61 Neutral | $5.80B | 10.30 | 12.08% | 0.64% | 8.56% | 17.84% | |
60 Neutral | $6.01B | 23.09 | 7.39% | ― | 0.12% | 2.78% | |
58 Neutral | $6.41B | 12.12 | 26.70% | ― | 6.06% | -1.71% | |
56 Neutral | $2.05B | 11.15 | 11.15% | 2.27% | 9.09% | -33.59% |
* Consumer Cyclical Sector Average
GPI
Group 1 Automotive
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-77.95
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Group 1 Automotive Corporate Events
Executive/Board ChangesRegulatory Filings and Compliance
Group 1 Automotive Updates Executive Severance Incentive Agreement
Neutral
Mar 3, 2026
On March 2, 2026, Group 1 Automotive, Inc. amended the incentive agreement of executive Daryl Kenningham, restructuring his severance benefits while keeping all other terms unchanged. The updated terms increase cash severance and extend health coverage following specified terminations or compensation reductions, particularly if they occur within six months of a corporate change, and make these enhanced severance benefits his exclusive remedy in connection with his employment and separation from the company.
The most recent analyst rating on (GPI) stock is a Buy with a $400.00 price target. To see the full list of analyst forecasts on Group 1 Automotive stock, see the GPI Stock Forecast page.
Dividends
Group 1 Automotive Raises 2026 Annual Dividend Payout
Positive
Feb 11, 2026
On February 11, 2026, Group 1 Automotive announced that its board of directors approved an increase in the 2026 annual dividend rate to $2.20 per share, up 10% from the 2025 rate of $2.00. The board also declared a quarterly cash dividend of $0.55 per share, payable on March 16, 2026, to stockholders of record as of March 2, 2026.
The dividend hike signals confidence in the company’s ongoing earnings strength and cash flow and enhances near-term income for shareholders. The move aligns with Group 1’s emphasis on returning capital to investors and may bolster its standing with income-oriented stakeholders in the automotive retail space.
The most recent analyst rating on (GPI) stock is a Hold with a $370.00 price target. To see the full list of analyst forecasts on Group 1 Automotive stock, see the GPI Stock Forecast page.
Financial Disclosures
Group 1 Automotive Schedules Q4 and Full-Year Results
Neutral
Jan 15, 2026
On January 14, 2026, Group 1 Automotive announced it would release its financial results for the fourth quarter and full year ended December 31, 2025, before the U.S. market opens on January 29, 2026, followed by a management-hosted conference call later that morning to discuss the results. The scheduled release and investor call underscore the company’s ongoing engagement with the market and provide shareholders and analysts with a key opportunity to assess Group 1’s recent operational and financial performance, which could influence perceptions of its positioning in the competitive automotive retail sector.
The most recent analyst rating on (GPI) stock is a Hold with a $428.00 price target. To see the full list of analyst forecasts on Group 1 Automotive stock, see the GPI Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.