FTSE 100 today: closes higher as UK inflation surprises; GBP lower, Ithaca report
On Wednesday, Citi analyst Michael Ward initiated coverage on Group 1 Automotive Inc . (NYSE:GPI) with a Buy rating and a price target of $463.00. Ward highlighted the resilience of auto dealers like GPI to higher tariffs compared to the broader auto sector and other retailers. Notably, GPI has consistently outperformed the S&P 500 over the past four years and maintained stability during the tariff crises.
The analysis by Citi pointed out that in 2024, 18% of GPI’s total gross profit came from selling new vehicles in the U.S. While there is a potential risk of a tariff-induced price increase affecting demand for new vehicles, the firm anticipates a rise in used vehicle prices, which represent 10% of the company’s gross, and an increase in demand for services, accounting for 42% of gross profit. Recent InvestingPro analysis shows the company maintains a gross profit margin of 16.26% and has achieved impressive revenue growth of 11.53% over the last twelve months.
The UK market, which is projected to contribute about 25% of GPI’s revenue in 2025, remains unaffected by U.S. tariff plans. This market saw a 3% improvement in registrations in 2025, marking the second year of consecutive growth. However, these figures are still 19% lower than the average from 2015 to 2019, indicating a potential for further growth.
Citi’s report also suggests that valuation multiples for dealer stocks like GPI are due for a re-rating. Despite trading at a 15% discount to pre-Covid levels, dealers have experienced better-than-expected financial performance during and after the crisis, with improved profit levels and accelerated consolidation. These factors could lead to double-digit revenue growth for GPI in 2025-2026.
Ward concluded that dealer group multiples are expected to return to historical levels once the tariffs are clarified and that GPI’s stock is likely to trade in line with its peers. The $463 price target is based on the midpoint of Citi’s multiple range and averages EV/EBITDA and P/E metrics, aligning with street estimates. Currently trading at a P/E ratio of 10.9x and with its next earnings report scheduled for April 24, 2025, investors should note that InvestingPro analysis suggests the stock is currently overvalued based on its proprietary Fair Value calculations. For deeper insights into GPI’s valuation and comprehensive analysis, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Group 1 Automotive reported impressive fourth-quarter 2024 earnings, surpassing Wall Street expectations with an adjusted diluted EPS of $10.02, compared to the forecasted $9.09. The company also exceeded revenue projections, posting $5.5 billion against the anticipated $5.2 billion. Group 1 Automotive achieved record results across several business lines, with new vehicle sales reaching $2.9 billion for the quarter. The company continues to focus on strategic acquisitions and operational improvements, as evidenced by the successful integration of Inchcape (OTC:INCPY)’s UK operations. In terms of executive changes, Michael D. Jones, the Senior Vice President – Aftersales, announced his retirement effective September 1, 2025, though he will remain as a part-time employee until the end of the year. Group 1 Automotive has not yet named a successor for Jones’s position. Additionally, the company is optimistic about its growth prospects for 2025, particularly in the UK market, and plans to address margin pressures in the EV fleet sales segment.
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