Group 1 Automotive, Inc (GPI): what the price requires
The current priced-in claim for Group 1 Automotive, Inc (GPI) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/GPI
Headline
| Field | Value |
|---|---|
| Ticker | GPI |
| Company | Group 1 Automotive, Inc |
| Current price | $295.90/sh |
| Composition | New vehicle retail sales 49% / Used vehicle retail sales 32% / Used vehicle wholesale sales 3% / Parts and service sales 13% / F&I, net 4% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 1.2% |
| Operating margin today | 3.7% |
| Margin compression implied | -2.5pp |
| Multiple paid | 8x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 7% sits below it).
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -1.07σ |
| cohort percentile (of 210 peers) | 10 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and relative-multiple and growth-DCF value, while earnings-power lands below the price. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.89x | 5 | justifies |
| Earnings | 4.13x | 4 | expensive |
| Relative | 0.41x | 3 | justifies |
| Growth | 0.69x | 3 | justifies |
Families that justify the price: Asset, Relative, Growth Families that call it expensive: Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.7%); the inversion above states its own rate.
Per-Model Detail (n=15)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $966.51 | 0.31x | yes | FCF base $0.3B, growth 8% (input: historical growth), terminal g 4.0%, WACC 6.7%, 6yr projection |
| DCF Exit Multiple | Growth | $430.74 | 0.69x | yes | Exit EV/EBITDA: 5.9x / 7.9x / 9.9x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $660.37 | 0.45x | yes | P/E 20x (static sector reference · 2026-04), scenarios: 16.7x / 20.0x / 23.3x (bear / base = reference held flat / bull), EV/EBITDA 14x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $297.86 | 0.99x | yes | BV/sh $239.03, ROE (TTM) 11.5%, ke 9.3% |
| Two-Stage Excess Return | Asset | $330.94 | 0.89x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $249.57 | 1.19x | yes | Rev $22.5B, growth 8% (input: historical growth; tapered), Terminal P/S: 0.1x / 0.2x / 0.2x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $657.44 | 0.45x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.94B × (1−24%) / WACC 6.7% → EPV (no growth) |
| Residual Income | Asset | $337.48 | 0.88x | yes | BV $239.03 + 5yr PV of (ROE (TTM) 11.5% − Kₑ 9.3%) × BV; BV grows 7.5%/yr |
| Graham Number | Asset | $376.95 | 0.78x | yes | √(22.5 × EPS $26.42 × BVPS $239.03) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $726.94 | 0.41x | yes | EBITDA $0.83B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $40.99 | 7.22x | yes | FCF $326.4M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $11.60 | 25.51x | yes | SBC-adj FCF $0.29B (FCF $0.33B − SBC $0.03B) capitalized at Kₑ (excluded from median) |
| Ben Graham Formula | Earnings | $22.14 | 13.36x | yes | EPS $26.42 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $111.99 | 2.64x | yes | BV $239.03 × (ROIC 3.1% / WACC 6.7%) |
| P/Sales Sector | Relative | $2837.64 | 0.10x | yes | Revenue $22.47B × sector P/S 1.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $285.62 | 1.04x | yes | EPS $26.42 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $3.1b |
| Net debt / NOPAT (after-tax) | 4.88x |
| Net debt / operating income (pre-tax) | 3.72x |
| Share count CAGR (buyback) | -8.0% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- This is a value-supported name, not a growth bet. At about $312.95 the asset-based methods land roughly on the price near $298 to $377, while the relative and growth methods land well above, between $444 and $933, putting the central blended read near $444.
- The balance sheet is being used aggressively for buybacks: the share count has shrunk at about 8% a year, and in the quarter the company repurchased roughly $72 million of stock at an average of $353 per share, above the current price.
- The parts-and-service annuity is the steady engine. The U.K. segment posted record quarterly gross profit of $230.6 million, up 6.3%, on strong same-store parts, service, and finance and insurance, even as total revenue dipped 1.8% to $5.4 billion.
Bull Case
The balance sheet and how management uses it is the cleanest way into Group 1, because the capital allocation tells you what the people who know the business best think it is worth. The company is shrinking its share count at roughly 8% a year, and in the first quarter it repurchased about $72 million of stock at an average price of $353.08, which is above today's $312.95 (June 27, 2026). Management buying back stock above the current price, while the valuation methods point higher still, is a direct statement of confidence: they are choosing to retire shares rather than hoard cash or chase low-return acquisitions. For a dealership group that generates steady cash, that buyback at a discount to intrinsic value is the compounding engine.
The underlying business is more durable than the headline cyclicality suggests, because the profit mix leans on the parts-and-service annuity rather than on new-car margins. The U.K. segment delivered record quarterly gross profit of $230.6 million, up 6.3%, supported by same-store parts, service, and finance and insurance, even as total revenue dipped 1.8% to $5.4 billion. Aftersales is the recurring, high-margin layer that holds up when vehicle sales soften, and the FY2025 10-K describes capital expenditures aimed at extending dealership facility lives and improving the customer experience to support exactly that aftersales franchise (FY2025 10-K, accession 0001031203-26-000064). The company is also actively reshaping the portfolio, acquiring three U.K. dealerships worth about $135 million in annual revenue, disposing of underperformers worth roughly $570 million, and signing a deal with Geely to add three new U.K. dealerships, pruning toward higher-return locations and brands.
The valuation is the rare case where the model and the Street agree the stock is cheap. The asset-based methods land near the price, the relative and growth methods land far above it, between roughly $444 and $933, and the central blended read is about $444, well above $312.95. Analyst sentiment matches: the consensus is a Strong Buy with an average target near $441 to $449, and recent moves include Citigroup raising its target to $462 and Barclays to $470. First-quarter EPS of $10.82, with adjusted EPS of $8.66, against a stock near $313 implies a low double-digit earnings multiple, undemanding for a business buying back its own shares this aggressively. For a value-oriented buyer, GPI offers a real asset floor, a recurring aftersales annuity, and management compounding per-share value through buybacks.
Bear Case
The external variable with the most leverage on Group 1 is the interest-rate and affordability environment, and the current price does not fully discount how exposed the model is to it. Auto retailing depends on two rate-sensitive flows: consumers financing vehicle purchases, and the dealer itself financing its inventory through floorplan lines. The company carries about $3.15 billion of gross debt, much of it floorplan financing whose cost rises directly with short-term rates, so a higher-for-longer rate environment squeezes the dealer's carrying cost at the same time it prices marginal buyers out of new vehicles. Total revenue already declined 1.8% year over year, a sign that volume is under pressure, and a genuine affordability shock, higher rates plus elevated vehicle prices plus tariff-driven cost increases on imported models, would hit both ends of the business at once.
The structural transition adds a second macro risk the price treats lightly. The shift toward electric vehicles threatens the highest-margin part of the dealership model, the service bay, because EVs need less routine maintenance, and it pressures the franchise relationships that some manufacturers are trying to reshape around direct sales. The new-vehicle gross margins that the industry enjoyed during the supply-constrained years have already normalized lower, and the F&I income that pads each transaction is sensitive to both deal volume and regulatory scrutiny of dealer financing practices. A dealer group is a leveraged bet on continued vehicle transaction volume and on the aftersales franchise staying intact, and both are exposed to forces, rates, policy, and the powertrain transition, that management does not control.
The valuation looks cheap on the methods, but the methods assume the cycle holds. The asset-based methods land near the current price, which is reassuring, but the relative and growth methods that push the value toward $444 and beyond extrapolate current earnings power forward, and current operating margin is only about 3.3%. If volumes keep falling, if floorplan costs stay elevated, or if a recession compresses both unit sales and aftersales, the earnings that justify the higher methods shrink, and the stock drifts toward the asset floor near $300 rather than toward the targets near $450. The bull case rests on management compounding through buybacks; the bear case is that they are buying back a cyclical at what could prove to be a mid-cycle earnings level, and the apparent cheapness evaporates if the cycle turns down.
Valuation
Group 1's X-ray is unusually bullish on the methods, with most families landing above the price. The asset-based methods cluster near the current level: simple excess return near $298, two-stage excess return near $331, residual income near $337, and the Graham number near $377. The relative and growth methods land far higher, with a peer-multiple method near $660, an EV/EBITDA method near $727, an exit-multiple DCF near $444, and a perpetual-growth DCF near $933. The free-cash-flow methods print low, but that is a structural feature of auto retailing, where floorplan inventory financing distorts reported free cash flow, so they are not a reliable signal here. The central blended read is about $444, well above the $312.95 price.
The inverted view is consistent with a value-supported name. The price is characterized as supported by asset-based, relative-multiple, and growth-DCF value, with only earnings-power saying expensive, and the earnings-power reading is depressed by the floorplan-distorted free cash flow rather than by weak operations. The embedded near-term operating assumption is modest, well within what the company has delivered, which is the profile of a stock priced near its asset value rather than for growth.
The honest synthesis is that the methods and the analysts agree GPI is cheap, and the disagreement is only about how much of the apparent cheapness is cyclical. The asset floor near $300 is real and close to the price, which limits the downside if the methods that anchor to current earnings prove too optimistic. The upside toward $444 and the analyst targets near $450 depends on the earnings power holding through a softer vehicle market, on the aftersales annuity staying durable, and on management continuing to compound per-share value through buybacks. The value is real and grounded in assets; the risk is that it is being measured against a mid-cycle earnings level.
Catalysts
The clearest catalyst is capital allocation, where the company repurchased about $72 million of stock at an average of $353 per share in the quarter and continues to shrink the share count at roughly 8% a year; continued buybacks below the methods' value are the compounding mechanism. Portfolio reshaping is an active catalyst, with the acquisition of three U.K. dealerships adding about $135 million in annual revenue, the disposal of underperformers worth roughly $570 million, and a new agreement with Geely to add three U.K. dealerships, all of which shift the mix toward higher-return locations. The aftersales trajectory is the key earnings signal, with the U.K. segment posting record quarterly gross profit of $230.6 million on strong parts, service, and finance and insurance; sustained aftersales growth is what holds the thesis through soft new-vehicle volumes. The macro backdrop is the dominant risk catalyst, since interest rates, vehicle affordability, and tariff-driven cost pressure all move both consumer demand and the company's floorplan financing costs. Analyst sentiment is strongly positive, with a Strong Buy consensus and an average target near $441 to $449, recent increases from Citigroup to $462 and Barclays to $470, and a more cautious UBS initiation at neutral with a $338 target, so the spread of views is itself a setup for re-rating if the earnings hold.
Sources: PRNewswire Q1, StockTitan Q1, Benzinga ratings, MarketBeat forecast
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- SAH (SONIC AUTOMOTIVE, INC.)
- (no filing in the citation store)
- AN (AUTONATION, INC.)
- (no filing in the citation store)
- PAG (Penske Automotive Group, Inc.)
- (no filing in the citation store)
- ABG (ASBURY AUTOMOTIVE GROUP, INC.)
- (no filing in the citation store)
- LAD (Lithia Motors, Inc.)
- (no filing in the citation store)
- RUSHA (RUSH ENTERPRISES, INC.)
- (no filing in the citation store)
- KMX (CARMAX, INC.)
- (no filing in the citation store)
- CVNA (CARVANA CO.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.