Group 1 Automotive Earnings: Here’s Why Investors Are Not Excited Now

Group 1 Automotive Inc. (NYSE:GPI) delivered a profit and missed Wall Street’s expectations, BUT beat the revenue expectation. The revenue beat is a positive sign to shareholders seeking high growth out of the company. Shares are down 8.1%.

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Group 1 Automotive Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 5.32% to $0.99 in the quarter versus EPS of $0.94 in the year-earlier quarter.

Revenue: Rose 19.23% to $1.94 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Group 1 Automotive Inc. reported adjusted EPS income of $0.99 per share. By that measure, the company missed the mean analyst estimate of $1.19. It beat the average revenue estimate of $1.91 billion.

Quoting Management:“Overall, 2012 was a great year for Group 1 Automotive with total revenue growth of 23 percent and all-time record net income and earnings per diluted share,” said Earl J. Hesterberg, Group 1′s president and chief executive officer. “Despite continuing the strong growth pace in the fourth quarter with 19 percent revenue growth, we missed some opportunities to maximize profits via complete leveraging of our cost structure. We began taking actions in this regard on Jan. 1, and I am confident that we can return to the type of cost leverage we generated in the first three quarters of the year. I believe 2013 will be another great year for the industry as a whole and Group 1 Automotive in particular.”

Key Stats (on next page)…

Revenue decreased 1.92% from $1.98 billion in the previous quarter. EPS decreased 25% from $1.32 in the previous quarter.

Looking Forward: Analysts have a more positive outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has risen from a profit of $1.13 to a profit $1.16. For the current year, the average estimate has moved up from a profit of $4.72 to a profit of $4.73 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)