On Dec 30, 2015, Zacks Investment Research upgraded Group 1 Automotive Inc. GPI to a Zacks Rank #2 (Buy).
Why the Upgrade?
Group 1 Automotive reported a 21.7% year-over-year increase in earnings per share to $1.91 in the third quarter of 2015 that surpassed the Zacks Consensus Estimate by 4 cents. The improvement in earnings was driven by strong top-line growth in the U.S. and the U.K. as well as expense leverage in the U.S. Revenues increased 6.6% year over year to a record high of $2.80 billion.
Group 1 Automotive has been benefiting from increasing new vehicle sales. In the first nine months of 2015, new vehicle unit sales rose 5.2% to 131,130 vehicles. In the third quarter of 2015, new vehicle unit sales increased 5.9% to 47,126 vehicles. The company expects the U.S. automotive markets to perform well in the future due to the improving U.S. sales environment.
In addition, Group 1 Automotive has a strong balance sheet. This allows the company to actively pursue capital deployment strategies. In order to boost shareholder value, the company hiked its quarterly cash dividend by 4.8% to 22 cents per share in Nov 2015. Concurrently, the company’s board of directors increased the share repurchase authorization to $100 million. During the first nine months of 2015, Group 1 Automotive repurchased 850,000 shares for a total of $71.1 million.
Other Stocks to Consider
Other well-ranked automobile stocks include U.S. Auto Parts Network, Inc. PRTS, Fox Factory Holding Corp FOXF and O'Reilly Automotive Inc. ORLY. All these stocks carry a Zacks Rank #2.
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