Group 1 Automotive 2025 Q3 Earnings Revenue Surpasses Estimates Despite EPS Miss

Group 1 Automotive (GPI) reported Q3 2025 earnings with revenue of $5.78 billion, surpassing the $5.67 billion consensus estimate by 2.77%. However, adjusted EPS of $10.45 missed the $10.64 estimate by 1.79%, while net income declined 88.9% year-over-year to $13 million. The stock dropped 4.79% pre-market following the release.

Revenue

Revenue growth was driven by robust performance across all segments. New vehicle retail sales totaled $2.81 billion, while used vehicle retail sales reached $1.85 billion. Wholesale used vehicle sales contributed $148.40 million, and parts and service sales generated $733.90 million. Finance, insurance, and other revenues added $240.90 million, completing the $5.78 billion total. The company’s U.S. operations led the charge, with record results in used vehicles, parts and service, and F&I, while the U.K. faced margin pressures from restructuring and a $123.9 million JLR impairment.

Earnings/Net Income

The company’s adjusted EPS of $10.45 fell short of estimates, reflecting challenges in translating revenue growth into profitability. Net income plummeted to $13 million, a stark contrast to $117.30 million in Q3 2024. The EPS miss and net income decline highlight structural issues, including goodwill impairments and operational costs, underscoring the need for caution in assessing short-term performance.

Post-Earnings Price Action Review

A backtest of a strategy to buy GPI on revenue beats and hold for 30 days reveals mixed signals. While GPI has beaten revenue estimates 100% of the time over the past two years, its stock underperformed post-earnings due to EPS misses. For instance, Q3 2025 saw a 4.79% pre-market drop despite revenue outperformance. Historical data suggests short-term volatility, with no clear trend of recovery within 30 days. Risks include declining profitability, restructuring costs, and limited historical data for reliable backtesting. The strategy remains speculative, requiring further analysis of market reactions to earnings surprises.

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CEO Commentary

During the earnings call, Daryl Kenningham, President and CEO, highlighted record quarterly revenues driven by U.S. after-sales and F&I performance. He emphasized cost discipline in the U.S., with SG&A leverage under 66%, while addressing U.K. challenges like inflation and the JLR exit. Kenningham noted progress in optimizing after-sales operations, including expanded service hours and technician recruitment, positioning the U.S. business for long-term success. Daniel McHenry, CFO, reiterated the focus on portfolio rationalization, with plans to reduce U.K. headcount by 10% and achieve $8 million in cost savings by 2026.

Guidance

Group 1 Automotive provided forward-looking metrics, including a current consensus EPS estimate of $10.20 for Q4 2025 and $42.25 for FY2025. The company’s Zacks Rank #3 (Hold) reflects mixed estimate revisions, suggesting in-line performance with the market. Management’s strategic focus on U.S. growth, cost control, and U.K. restructuring indicates cautious optimism, though investors should monitor evolving industry conditions and execution risks.

Additional News

Group 1 Automotive expanded its premium brand portfolio with the acquisition of a Mercedes-Benz dealership in Georgia, enhancing its presence in key markets. The company also announced a share repurchase program, repurchasing 186,000 shares in Q3 at an average price of $443.81. Additionally, the CEO highlighted ongoing systems integration efforts in the U.K., including consolidating 11 DMS platforms and implementing a new business intelligence system to improve operational efficiency. These moves underscore the company’s commitment to optimizing its portfolio and leveraging technology for long-term growth.

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