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Group 1 Automotive (GPI)
NYSE:GPI
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Group 1 Automotive
(NYSE:GPI)
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Rating:67Neutral
Price Target:
$394.00
▲(11.22% Upside)
The score is driven mainly by solid but pressured fundamentals (declining margins, higher leverage, and negative FCF growth) and weak technicals (below key moving averages with negative MACD). These are partially offset by a strong and constructive earnings call narrative (record results, strong cash generation, and shareholder returns) and a reasonable P/E valuation, though the dividend yield is modest.
Positive Factors
Aftersales & F&I Strength
High and growing parts & service gross profit creates a recurring, higher-margin revenue base that is less cyclical than new-vehicle sales. Technician headcount increases and improved customer-pay performance support durable aftermarket cash flows and margin insulation over coming quarters.
Strong Cash Generation & Capital Allocation
Robust operating and free cash flow funds buybacks, targeted acquisitions, and liquidity without reliance on equity raises. Consistent FCF supports strategic portfolio optimization and shareholder returns while preserving capacity for disciplined M&A over the next several quarters.
Resilient Revenue & Volume Scale
Record volumes and steady TTM revenue growth reflect scale and diversified sales across new, used, and services. Scale enhances OEM relationships, purchasing power and fixed-cost absorption, supporting competitive position and operational leverage over a multi‑quarter horizon.
Negative Factors
Elevated Leverage
Higher leverage reduces financial flexibility and raises refinancing and covenant risks, particularly if margins or used-vehicle profitability soften. Management’s stated leverage target below 3x indicates leverage is near tolerable limits and may constrain capital deployment choices.
Margin Compression
Declining net and operating margins signal pressure on profitability from SG&A increases, GPU compression and impairments. Sustained margin erosion would weaken return on capital and reduce free cash flow generation, impairing long-term reinvestment and buyback capacity.
UK Execution & Structural Headwinds
Persistent UK macro, competitive and BEV mandate pressures require multi‑quarter restructuring. Volume declines and GPU weakness in the UK create execution risk and uncertain timing for returns, making near‑term earnings and margin recovery in that market less predictable.
Group 1 Automotive (GPI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.47B
Dividend Yield0.49%
Average Volume (3M)141.94K
Price to Earnings (P/E)14.0
Beta (1Y)0.77
Revenue Growth19.45%
EPS Growth-24.27%
CountryUS
Employees20,413
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Dealerships
Share Statistics
EPS (TTM)8.49
Shares Outstanding12,630,617
10 Day Avg. Volume163,251
30 Day Avg. Volume141,944
Financial Highlights & Ratios
PEG Ratio-0.78
Price to Book (P/B)1.88
Price to Sales (P/S)0.28
P/FCF Ratio16.40
Enterprise Value/Market Cap1.82
Enterprise Value/Revenue0.36
Enterprise Value/Gross Profit2.24
Enterprise Value/Ebitda8.95
Forecast
1Y Price Target
$465.00Price Target Upside31.26% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
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 MoneyGroup 1 Automotive generates revenue through multiple streams, primarily from the sale of new and used vehicles, which constitutes its largest source of income. The company also earns significant revenue from finance and insurance products offered to customers at the point of sale. Additionally, GPI generates income through its service and parts departments, which provide ongoing maintenance and repairs for vehicles sold. The company benefits from strategic partnerships with various automotive manufacturers, enhancing its inventory and enabling access to exclusive promotions. Moreover, Group 1 Automotive's focus on operational efficiency and customer service helps drive repeat business and customer loyalty, contributing to its overall earnings.
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
Steady TTM revenue growth (2.55%) and stable gross margin (~16%) are positives, but profitability has weakened (net margin down to 1.66%; EBIT/EBITDA margins declining). Leverage is elevated with debt-to-equity at 1.86 and ROE down to 12.39%. Cash generation is mixed, with negative free cash flow growth (-17.90%) and a low operating cash flow to net income ratio (0.23).Income Statement
Group 1 Automotive shows a steady revenue growth rate of 2.55% in the TTM, indicating resilience in a competitive market. However, the net profit margin has decreased to 1.66% from 2.50% in the previous year, suggesting pressure on profitability. The gross profit margin remains stable at around 16%, but the EBIT and EBITDA margins have declined, reflecting potential operational challenges.75
Positive
Balance Sheet
The company's debt-to-equity ratio has increased to 1.86, indicating higher leverage, which could pose risks if not managed carefully. Return on equity has decreased to 12.39% from 16.75% in the previous year, showing a decline in efficiency. The equity ratio remains stable, suggesting a balanced asset structure.70
Positive
Cash Flow
Free cash flow growth has turned negative at -17.90%, raising concerns about cash generation. The operating cash flow to net income ratio is relatively low at 0.23, indicating potential cash flow constraints. However, the free cash flow to net income ratio remains healthy at 0.63, suggesting some level of cash flow stability.65
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 22.54B | 19.93B | 17.87B | 16.22B | 13.48B | 10.60B |
| Gross Profit | 3.63B | 3.24B | 3.02B | 2.97B | 2.44B | 1.73B |
| EBITDA | 909.90M | 1.02B | 1.06B | 1.18B | 963.20M | 557.70M |
| Net Income | 376.30M | 498.20M | 601.60M | 751.50M | 552.10M | 286.50M |
Balance Sheet | ||||||
| Total Assets | 10.39B | 9.82B | 7.77B | 6.72B | 5.75B | 5.09B |
| Cash, Cash Equivalents and Short-Term Investments | 30.80M | 34.40M | 57.20M | 47.90M | 14.90M | 69.00M |
| Total Debt | 5.68B | 5.24B | 3.89B | 3.35B | 2.85B | 2.65B |
| Total Liabilities | 7.34B | 6.85B | 5.10B | 4.48B | 3.92B | 3.64B |
| Stockholders Equity | 3.05B | 2.97B | 2.67B | 2.24B | 1.83B | 1.45B |
Cash Flow | ||||||
| Free Cash Flow | 494.00M | 341.20M | -121.90M | 430.40M | 1.12B | 702.20M |
| Operating Cash Flow | 778.70M | 586.30M | 63.50M | 585.90M | 1.26B | 805.40M |
| Investing Cash Flow | -732.40M | -1.28B | -366.10M | -484.60M | -1.25B | -74.70M |
| Financing Cash Flow | -75.90M | 681.10M | 311.90M | -67.30M | -74.00M | -668.10M |
Group 1 Automotive Technical Analysis
Negative
354.26
Price Trends
400.27
Negative
414.06
Negative
423.98
Negative
Market Momentum
-7.24
Positive
25.12
Positive
13.90
Positive
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 354.26 is below the 20-day moving average (MA) of 393.68, below the 50-day MA of 400.27, and below the 200-day MA of 423.98, indicating a bearish trend. The MACD of -7.24 indicates Positive momentum. The RSI at 25.12 is Positive, neither overbought nor oversold. The STOCH value of 13.90 is Positive, 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 23 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 |
|---|---|---|---|---|---|---|---|
76 Outperform | $7.84B | 9.36 | 13.44% | 0.64% | 8.56% | 17.84% | |
70 Neutral | $7.38B | 12.06 | 27.16% | ― | 6.06% | -1.71% | |
67 Neutral | $4.47B | 13.99 | 11.10% | 0.49% | 19.45% | -24.27% | |
67 Neutral | $4.56B | 8.23 | 15.49% | ― | 8.07% | 60.95% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
61 Neutral | $6.32B | 14.73 | 7.46% | ― | 0.12% | 2.78% | |
61 Neutral | $2.05B | 16.20 | 12.51% | 2.27% | 9.09% | -33.59% |
* Consumer Cyclical Sector Average
GPI
Group 1 Automotive
354.26
-92.10
-20.63%
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Group 1 Automotive Corporate Events
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.
Business Operations and StrategyStock BuybackDividends
Group 1 Automotive Boosts Share Repurchase Program
Positive
Nov 12, 2025
On November 11, 2025, Group 1 Automotive announced that its Board of Directors increased the company’s share repurchase authorization to $500 million, up by $457 million. This move reflects the company’s strategic financial management and commitment to enhancing shareholder value. Additionally, the board declared a quarterly dividend of $0.50 per share, payable on December 15, 2025, aligning with the company’s annualized dividend rate increase from $1.88 in 2024 to $2.00 in 2025. These financial decisions underscore Group 1 Automotive’s robust operational performance and its focus on returning value to shareholders.
The most recent analyst rating on (GPI) stock is a Buy with a $510.00 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.