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Relative to Consumer Discretionary Sector Median (N=442)
Metric
GPI
Benchmark
P/E Ratio
9.6x
-61%
EV/EBITDA
4.1x
-17%
Price / Book
1.4x
Implied Value Audit
UNDERVALUED
Implied Fair Value (vs Sector)
+38.3%
$467.50Spot: $338.14
Spot
Implied
-50% Delta+50% Delta
Relative valuation derived from Consumer Discretionary sector median benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Multiples adjusted for extreme outliers and non-recurring volatility.
Auditing capital efficiency...
Quality Profile Audit
Score: 50GRADE C+
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation.
Return on Equity
Profit generated per dollar of shareholder equity
14.3%
Sector: 6.2%
Dividend Analysis audit
GROWTH
0.45%
Trailing Yield
$0.45
Per $100 Invested
Modest dividend — capital prioritized for reinvestment.
Est. Payout Ratio
4%SAFE
Analyst Projections
Analyst Consensus
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Based on our 6-factor quantitative model, GROUP 1 AUTOMOTIVE INC (GPI) receives a "Reduce" rating with a composite score of 43.1/100, ranked #2368 out of 4446 stocks. Key factor scores: Quality 50/100, Value 77/100, Momentum 26/100. This is quantitative analysis only — not investment advice.
GROUP 1 AUTOMOTIVE INC (GPI) Stock Analysis — April 2026 Rating, Price, and Forecast
Company Overview — What Does GROUP 1 AUTOMOTIVE INC Do?
Group 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 February 18, 2022, the company owned and operated 200 automotive dealerships, 266 franchises, and 45 collision centers that offer 34 brands of automobiles. Group 1 Automotive, Inc. was incorporated in 1995 and is based in Houston, Texas. GROUP 1 AUTOMOTIVE INC (GPI) is classified as a mid-cap stock in the Consumer Discretionary sector, specifically within the Retail industry. The company is led by CEO Earl J. Hesterberg and employs approximately 15,500 people, headquartered in Houston, Texas. With a market capitalization of $3.9B, GPI is one of the notable companies in the Consumer Discretionary sector.
As of April 2026, GROUP 1 AUTOMOTIVE INC receives a Reduce rating with a composite score of 43.1/100 and 2 out of 5 stars from the Blank Capital Research quantitative model.GPI ranks #2,368 out of 4,446 stocks in our coverage universe. Within the Consumer Discretionary sector, GROUP 1 AUTOMOTIVE INC ranks #237 of 442 stocks, placing it in the lower half of its Consumer Discretionary peers. The rating is generated by a multi-factor model that weighs quality (30%), momentum (25%), value (15%), investment (10%), stability (10%), and short interest (10%).
GPI Stock Price and 52-Week Range
GROUP 1 AUTOMOTIVE INC (GPI) currently trades at $338.14. The stock gained $0.03 (0.0%) in the most recent trading session. The 52-week high for GPI is $488.39, which means the stock is currently trading -30.8% from its annual peak. The 52-week low is $292.44, putting the stock 15.6% above its annual trough. Recent trading volume was 64K shares, suggesting relatively thin trading activity.
Is GPI Overvalued or Undervalued? — Valuation Analysis
GROUP 1 AUTOMOTIVE INC (GPI) carries a value factor score of 77/100 in the Blank Capital model, suggesting the stock trades at a meaningful discount to its fundamental earning power. The trailing price-to-earnings ratio is 9.64x, compared to the Consumer Discretionary sector average of 24.47x — a discount of 61%. The price-to-book ratio stands at 1.38x, versus the sector average of 1.99x. The price-to-sales ratio is 0.17x, compared to 0.27x for the average Consumer Discretionary stock. On an enterprise value basis, GPI trades at 4.07x EV/EBITDA, versus 4.91x for the sector.
Based on these multiples, GROUP 1 AUTOMOTIVE INC appears attractively valued relative to both its sector peers and the broader market. Value-oriented investors may find the current entry point compelling, particularly if the company's fundamental quality metrics also score well.
GROUP 1 AUTOMOTIVE INC Profitability — ROE, Margins, and Quality Score
GROUP 1 AUTOMOTIVE INC (GPI) earns a quality factor score of 50/100, indicating solid business quality with consistent operational execution. The return on equity (ROE) is 14.3%, compared to the Consumer Discretionary sector average of 6.2%, which is within a healthy range. Return on assets (ROA) comes in at 3.9% versus the sector average of 2.5%.
On a margin basis, GROUP 1 AUTOMOTIVE INC reports gross margins of 16.2%, compared to 36.9% for the sector. The operating margin is 3.7% (sector: 3.8%). Net profit margin stands at 1.8%, versus 2.1% for the average Consumer Discretionary stock. Revenue growth is running at 23.1% on a trailing basis, compared to 3.3% for the sector. The overall profitability profile is adequate, though there may be room for margin expansion.
GPI Debt, Balance Sheet, and Financial Health
GROUP 1 AUTOMOTIVE INC has a debt-to-equity ratio of 271.0%, compared to the Consumer Discretionary sector average of 89.0%. This elevated leverage warrants close monitoring, as it increases the company's sensitivity to rising interest rates and economic downturns. The current ratio is 1.08x, suggesting adequate working capital coverage. Total debt on the balance sheet is $5.38B. Cash and equivalents stand at $31M.
GPI has a beta of 0.81, meaning it is roughly in line with the broader market in terms of price volatility. The stability factor score for GROUP 1 AUTOMOTIVE INC is 68/100, reflecting average volatility within the normal range for its sector.
GROUP 1 AUTOMOTIVE INC Revenue and Earnings History — Quarterly Trend
In TTM 2026, GROUP 1 AUTOMOTIVE INC reported revenue of $22.21B and earnings per share (EPS) of $25.29. Net income for the quarter was $399M. Gross margin was 16.2%. Operating income came in at $826M.
In FY 2025, GROUP 1 AUTOMOTIVE INC reported revenue of $22.57B and earnings per share (EPS) of $25.29. Net income for the quarter was $325M. Gross margin was 16.1%. Revenue grew 13.2% year-over-year compared to FY 2024. Operating income came in at $734M.
In Q3 2025, GROUP 1 AUTOMOTIVE INC reported revenue of $5.78B and earnings per share (EPS) of $1.00. Net income for the quarter was $13M. Gross margin was 15.9%. Revenue grew 10.7% year-over-year compared to Q3 2024. Operating income came in at $108M.
In Q2 2025, GROUP 1 AUTOMOTIVE INC reported revenue of $5.70B and earnings per share (EPS) of $10.84. Net income for the quarter was $141M. Gross margin was 16.4%. Revenue grew 21.4% year-over-year compared to Q2 2024. Operating income came in at $253M.
Over the past 8 quarters, GROUP 1 AUTOMOTIVE INC has demonstrated a growth trajectory, with revenue expanding from $4.70B to $22.21B. Investors analyzing GPI stock should weigh these quarterly trends alongside the valuation and quality metrics discussed above.
GPI Dividend Yield and Income Analysis
GROUP 1 AUTOMOTIVE INC (GPI) currently pays a dividend yield of 0.4%. At this yield, a $10,000 investment in GPI stock would generate approximately $$45.00 in annual dividend income.
GPI Momentum and Technical Analysis Profile
GROUP 1 AUTOMOTIVE INC (GPI) has a momentum factor score of 26/100, signaling weak relative price performance. Stocks with low momentum scores have historically tended to continue underperforming in the near term. The investment factor score is 25/100, which measures capital allocation efficiency and asset growth patterns. The short interest score of 7/100 signals elevated short interest, which can indicate bearish sentiment among institutional investors.
GPI vs Competitors — Consumer Discretionary Sector Ranking and Peer Comparison
Comparing GPI against the S&P 500 benchmark is also instructive for understanding relative performance. Investors can view the full GPI vs S&P 500 (SPY) comparison to assess how GROUP 1 AUTOMOTIVE INC stacks up against the broader market across all factor dimensions.
GPI Next Earnings Date
No upcoming earnings date has been announced for GROUP 1 AUTOMOTIVE INC (GPI) at this time. Check the earnings calendar for the latest scheduling updates across all stocks in our coverage universe.
Should You Buy GPI? — Investment Thesis Summary
The quantitative profile for GROUP 1 AUTOMOTIVE INC suggests caution. The value score of 77/100 suggests attractive pricing relative to fundamentals. Momentum is weak at 26/100, a headwind for near-term performance. Low volatility (stability score 68/100) reduces downside risk.
In summary, GROUP 1 AUTOMOTIVE INC (GPI) earns a Reduce rating with a composite score of 43.1/100 as of April 2026. The rating is derived from the Blank Capital Research methodology, which combines six factor dimensions into a single quantitative ranking. Investors should consider these quantitative signals alongside their own fundamental research, risk tolerance, and investment time horizon before making buy or sell decisions on GPI stock.
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Institutional Research Dossier
GROUP 1 AUTOMOTIVE INC (GPI) Deep Dive Analysis
Published on March 24, 2026
Action RatingReduce
Sections
Executive Summary
Group 1 Automotive (GPI) receives a Hold rating, driven by a mixed financial profile. While the company exhibits attractive value multiples and has demonstrated strong revenue growth, concerns arise from its high debt levels, negative free cash flow, and recent decline in profitability. The current valuation appears reasonable, but the inherent risks associated with the cyclical nature of the automotive retail industry and the company's capital allocation strategy warrant a cautious approach.
The company's aggressive acquisition strategy, while contributing to revenue growth, has significantly increased its debt burden and negatively impacted free cash flow. Furthermore, recent quarterly results indicate a concerning trend of declining net income and operating margins, raising questions about the sustainability of its historical performance. While the value proposition is compelling based on relative multiples, the deteriorating financial health and uncertain macroeconomic outlook justify a neutral stance.
Business Strategy & Overview
Group 1 Automotive operates as a consolidator in the highly fragmented automotive retail industry. The company's core strategy revolves around acquiring and operating dealerships across the United States and the United Kingdom. This acquisition-driven growth model allows Group 1 to expand its geographic footprint, diversify its brand portfolio, and leverage economies of scale in areas such as purchasing, marketing, and back-office operations. The company generates revenue primarily from the sale of new and used vehicles, as well as from parts and service operations, and finance and insurance products.
A key component of Group 1's strategy is to optimize the performance of acquired dealerships by implementing best practices in sales, service, and inventory management. The company focuses on improving customer satisfaction, increasing service absorption rates (the percentage of fixed costs covered by service revenue), and managing inventory levels to maximize profitability. Group 1 also invests in technology and digital marketing to enhance its online presence and attract customers through various channels.
The company's strategic positioning within the automotive retail industry is characterized by its focus on larger metropolitan markets and its diversified brand portfolio, which includes both domestic and import brands. This diversification helps to mitigate the risk associated with fluctuations in demand for specific brands or vehicle types. Furthermore, Group 1's presence in both the United States and the United Kingdom provides geographic diversification and exposure to different economic cycles.
Group 1's business model is inherently tied to the cyclical nature of the automotive industry. Demand for new and used vehicles is sensitive to economic conditions, consumer confidence, and interest rates. As such, the company's financial performance can be significantly impacted by macroeconomic factors. The company also faces competition from other large dealership groups, as well as from online car retailers and direct-to-consumer manufacturers.
Execution Benchmarks audit
Revenue Growth
YOY expansion rate
23.1%
Sector: 3.3%
+602% VS SCTR
Economic Moat Analysis
Group 1 Automotive possesses a narrow economic moat, primarily derived from its geographic diversification and established brand relationships. The automotive retail industry is characterized by high fragmentation, with numerous independent dealerships and regional groups. Group 1's scale and geographic reach provide a competitive advantage in terms of purchasing power, marketing efficiency, and access to capital. The company's relationships with major automotive manufacturers also create a barrier to entry for smaller players.
However, the moat is considered narrow due to the relatively low switching costs for consumers. Customers can easily compare prices and shop for vehicles at different dealerships or online retailers. The automotive retail industry is also subject to intense price competition, which can erode profit margins. While Group 1's size and scale provide some cost advantages, these are not substantial enough to create a wide economic moat.
The company's intangible assets, such as brand reputation and customer loyalty, are also limited. While Group 1 strives to provide excellent customer service, the automotive retail experience is often perceived as transactional and price-driven. As a result, customers are less likely to exhibit strong brand loyalty and are more likely to switch to a competitor offering a better deal.
The absence of network effects further weakens Group 1's competitive position. The value of the company's services does not increase as more customers use them. In contrast, businesses with strong network effects, such as social media platforms or online marketplaces, benefit from increasing returns to scale as their user base grows.
Efficient scale is not a significant factor in the automotive retail industry. While larger dealerships may benefit from economies of scale, smaller dealerships can still compete effectively by focusing on niche markets or providing specialized services. The industry is not characterized by natural monopolies or oligopolies, which would create a wider economic moat for the dominant players.
Financial Health & Profitability
Group 1 Automotive's financial health presents a mixed picture. While the company has demonstrated strong revenue growth in recent years, its profitability and cash flow generation have been more volatile. The company's revenue has grown significantly, from $17.87 billion in FY2023 to $22.57 billion in FY2025. This growth has been driven by acquisitions and organic sales increases. However, net income has declined from $601.60 million in FY2023 to $325.20 million in FY2025, indicating a concerning trend of declining profitability.
The company's gross margin has remained relatively stable, hovering around 16%, but its operating margin has decreased from 5.4% in FY2023 to 3.3% in FY2025. This decline in operating margin suggests that the company is facing increasing operating expenses or pricing pressures. The net margin has also decreased from 3.4% to 1.8% over the same period.
Group 1's balance sheet is characterized by a high level of debt. The company's total debt stands at $5.38 billion, while its total cash is only $30.80 million. This results in a high debt-to-equity ratio of 271.00, which is significantly higher than the sector average of 91.00. The company's current ratio of 1.08 indicates that it has sufficient current assets to cover its current liabilities, but its high debt burden remains a concern.
The company's free cash flow is negative, at $-288.69 million. This is a significant red flag, as it indicates that the company is not generating enough cash to cover its capital expenditures and other obligations. The negative free cash flow is likely due to the company's aggressive acquisition strategy, which requires significant investments in new dealerships. The quarterly financial history shows a large negative FCF in Q3 FY2024 of $-1.97B, which may be related to acquisition activity.
Compared to the consumer discretionary sector, Group 1's ROE of 14.3% is significantly higher than the sector average of 5.8%. This indicates that the company is generating a higher return on equity than its peers. However, its gross margin, operating margin, and net margin are all lower than the sector averages, suggesting that the company is less profitable than its peers on a per-dollar-of-revenue basis.
Valuation Assessment
Group 1 Automotive's valuation appears attractive based on several key metrics. The company's P/E ratio of 12.6x is significantly lower than the consumer discretionary sector average of 28.0x, suggesting that the stock is undervalued relative to its earnings. Similarly, the company's EV/EBITDA ratio of 1.3x is substantially lower than the sector average of 5.3x, further supporting the argument that the stock is undervalued.
However, it is important to consider the company's declining profitability and negative free cash flow when assessing its valuation. While the P/E and EV/EBITDA multiples may appear attractive, they do not fully reflect the company's deteriorating financial health. The company's high debt burden and negative free cash flow could limit its ability to invest in future growth and return capital to shareholders.
The company's historical valuation trends also provide some context. Group 1's P/E ratio has fluctuated over time, but it has generally traded at a discount to the broader market. This discount may reflect the cyclical nature of the automotive retail industry and the company's high debt levels. The recent decline in net income has likely contributed to the current low P/E ratio.
A discounted cash flow (DCF) analysis would be necessary to determine the intrinsic value of the stock. However, given the company's negative free cash flow and uncertain future growth prospects, a DCF analysis would likely yield a conservative valuation. The company's high debt burden and declining profitability would also need to be factored into the DCF model.
Overall, Group 1 Automotive's valuation appears to be fair, but not necessarily a bargain. The company's attractive value multiples are offset by its declining profitability, negative free cash flow, and high debt burden. Investors should carefully consider these factors before investing in the stock.
Risk & Uncertainty
Group 1 Automotive faces several specific risks that could negatively impact its business and financial performance. The most significant risk is the cyclical nature of the automotive retail industry. Demand for new and used vehicles is highly sensitive to economic conditions, consumer confidence, and interest rates. A recession or economic slowdown could lead to a significant decline in vehicle sales, which would negatively impact Group 1's revenue and profitability.
Another key risk is the company's high debt burden. Group 1 has a significant amount of debt on its balance sheet, which increases its financial leverage and makes it more vulnerable to economic downturns. The company's debt service obligations could strain its cash flow and limit its ability to invest in future growth. Rising interest rates could also increase the company's borrowing costs and further exacerbate its debt burden.
Competition is also a significant risk for Group 1. The automotive retail industry is highly competitive, with numerous independent dealerships, regional groups, and online retailers vying for customers. The company faces competition from both traditional brick-and-mortar dealerships and online car retailers, such as Carvana and Vroom. Increased competition could lead to pricing pressures and reduced profit margins.
Manufacturer relationships also pose a risk. Group 1 relies on its relationships with major automotive manufacturers to obtain inventory and access to new vehicle models. A disruption in these relationships, such as a manufacturer deciding to reduce the number of dealerships or change its distribution strategy, could negatively impact Group 1's business.
Finally, changes in consumer preferences and technology could also pose a risk. The automotive industry is undergoing a period of rapid change, with the rise of electric vehicles, autonomous driving, and shared mobility. Group 1 needs to adapt to these changes and invest in new technologies to remain competitive. Failure to do so could result in a loss of market share and reduced profitability.
Bulls Say / Bears Say
The Bull Case
BULL VIEWGroup 1's low valuation multiples (P/E and EV/EBITDA) offer a compelling entry point, especially if the company can stabilize its profitability and improve free cash flow generation.
BULL VIEWThe company's acquisition strategy, while increasing debt, has also driven significant revenue growth and expanded its geographic footprint, positioning it for long-term success in a fragmented industry.
The Bear Case
BEAR VIEWGroup 1's high debt levels and negative free cash flow raise serious concerns about its financial stability, particularly in the event of an economic downturn or a decline in vehicle sales.
BEAR VIEWThe company's declining profitability and operating margins suggest that its acquisition strategy is not generating the expected returns, and that it may be facing increasing competitive pressures.
About the Author
Marques Blank
Founder & Chief Investment Officer, Blank Capital
Marques brings 15 years of institutional finance and investing experience, having overseen financial planning for a $1.6B defense business unit. He developed the proprietary 6-factor quantitative model used to score GPI and 4,400+ other equities.
GROUP 1 AUTOMOTIVE INC exhibits a 36% valuation discount relative to institutional benchmarks. This represents a constructive entry window based on current multiples.
Return on Assets
Efficiency of asset utilization
3.9%
Sector: 2.5%
Gross Margin
Pricing power and cost efficiency
16.2%
Sector: 36.9%
Operating Margin
Core business profitability
3.7%
Sector: 3.8%
Net Margin
Bottom-line profitability
1.8%
Sector: 2.1%
Factor Methodology
The Quality factor evaluates the persistence and magnitude of cash flows. Companies with scores >70 exhibit superior competitive moats and financial resilience through economic cycles.
Sector Avg Yield0.00%
Yield Delta—
Income Projection audit
A $10,000 investment would generate approximately $45 annually in dividends at the current trailing rate.
