GPI changes
Pick any two versions below to diff them.
- Price
- $239.80 → $224.85(−6.2%)
- Discount
- 35% to 52% → 39% to 55%(+4.0 pts)
- Next earnings
- 2026-10-30 → 2026-10-28
- Next earnings is estimate
- Yes → No
- Thesis
- The market prices Group 1 for lower profits per car while high interest rates and high car prices make cars hard to afford. In Q2 2026, total gross profit fell 8.0%, new vehicle gross profit per car fell 8.5% to $3,254, used retail units fell 11.2%, and diluted EPS from continuing operations fell to $8.62 from $10.77. Costs did not fall as fast, so SG&A rose to 72.4% of gross profit. At the same time, Group 1 added debt to buy the Hennessy dealerships in Atlanta for about $1.3 billion plus inventory, and the company's own pro forma net leverage ratio was 4.2 times. Investors fear that profits keep falling while debt is higher. For the gap to close, three things must be true. Gross profit per car must stop falling, and used car volumes must stabilize. US adjusted SG&A must stay near or below the 66.4% of gross profit of Q2 2026, with the $50 million of yearly cost cuts in place. The Hennessy purchase must close by the end of 2026, as planned, and add its expected $1.7 billion of yearly revenue and earnings, so that leverage falls with cash flow. The Q3 2026 report, expected at the end of on October 28, 2026, gives the first evidence, and the Hennessy closing and the Q4 2026 report in about February 2027 give the next. If profits per car stabilize, the gap can close over the next four to six quarters. If high rates keep cars hard to afford for longer, profits can stay low and the higher debt adds risk.
- Checkpoints
- Oct 3028, 2026 (estimate): Q3 2026 results: gross profit per car and costs. Pending. Watch: New vehicle gross profit per car that stops falling and US adjusted SG&A near 66% of gross profit pass; another large fall in gross profit and EPS fails. Dec 2026 (estimate): Hennessy purchase closes. Pending. Watch: Closing by the end of 2026 with all approvals passes; a delay past January 6, 2027 that forces the redemption of the 2032 notes fails. Feb 2027 (estimate): Q4 2026 results: first quarter with Hennessy and leverage. Pending. Watch: Stable same store gross profit and a lower leverage ratio after the Hennessy closing pass; falling same store profits with higher leverage fail.
- Recent events
- 2026-09-29: Conifer Management reported that it owned about 15.4% of Group 1's shares on September 25, 2026, up from about 9.7% on August 20, 2026. It paid about $80 million for the shares that it bought after September 22, 2026. 2026-09-23: Group 1 Realty, a subsidiary, signed a term loan with Bank of America for up to $190.3 million, equal to 85% of the appraised value of the mortgaged dealership properties, at Term SOFR plus 1.45%. 2026-09-22: Group 1 closed a $1.25 billion offering of senior unsecured notes: $625 million at 6.250% due 2032 and $625 million at 6.625% due 2035. The money pays for the Hennessy purchase. If the purchase does not close by January 6, 2027, or a later date that the purchase agreement allows, Group 1 must redeem the 2032 notes. 2026-09-22: Group 1 agreed to appoint Benjamin Hart of Conifer Management, one of its largest shareholders, to its Board from November 1, 2026. The agreement with Conifer includes standstill and voting terms. On August 20, 2026, Conifer had reported that it owned about 9.7% of the shares. 2026-08-11: Group 1 appointed David Kimbell, former CEO of Ulta Beauty, to its Board, and declared a quarterly dividend of $0.55 per share, in line with a 10% higher yearly dividend of $2.20 per share in 2026. 2026-07-30: Group 1 agreed to buy the 10 dealerships, one collision center and related real estate of Hennessy Automobile Companies in Atlanta for about $1.3 billion, plus remaining inventory. The dealerships sell brands such as Lexus, Jaguar Land Rover and Porsche and have about $1.7 billion of yearly revenue. Group 1 expects to close by the end of 2026, after regulatory and car maker approvals. 2026-07-30: Group 1 reported Q2 2026 results. Revenue was $5.4 billion, down 5.6%. Diluted EPS from continuing operations was $8.62, and adjusted EPS was $9.61, down from $11.52. The CEO said results softened because of consumer affordability issues. Group 1 completed its $50 million yearly cost cut in the US and bought back no shares in the quarter. 2026-04-30: Group 1 reported Q1 2026 results. Revenue was $5.4 billion, down 1.8%. Adjusted diluted EPS from continuing operations was $8.66, down from $10.17. The CEO said that high interest rates and high car and gasoline prices hurt affordability, and the company started cost cuts in the US and the UK.