A group called Zack's polled 8 analysts that write investment research on Group 1 (not me), and came to the conclusion that on average, these analysts expect Group 1 to earn (so after the company has paid all expenses and taxes associated with selling and fixing the vehicles) about $0.88 per every share of Group 1 stock out there. If achieved, this would be about 4% worse than what Group 1 earned per share last year in the first quarter.
I also estimate Group 1 will make about $0.88 per share in the first quarter. This is based my forecast for them to sell $1.4 billion worth of stuff, about 7.9% less stuff than what they sold with the same number of stores (so same-store sales) in the first three months of 2006. And I think they will make about $3.50 in operating profit for every $100 of stuff they sell (so 3.5% operating margin).
For all of 2007, I think they will earn about $4.05 for every share folks own of the company. My forecast assumes Group 1 will account for about 83 out of every 1,000 vehicles I estimate will be sold in the United States in 2007 (about 16.3 million units). My forecast for what Group 1 earns in 2007 on the sale of these new and used vehicles, financing, and repairs, is a bit lower than the $4.15 the professional analysts are guesstimating.
I'll continue to encourage you not to get caught up in the ebbs and flows. What we're really trying to do is watch the "bouncing ball" to make sure the company is progressing along the path to my 2012 forecast of $7.96.
They'll release the results before the market opens. The conference call is at 10:00 am (eastern). The dial in number is 1-866-249-6463.
What I said last year about Group 1's 1Q06 results (May 2, 2006):
Annual guidance was raised to a range of $3.40 to $3.70 from previous guidance of $3.15 to $3.45 Guidance is based on an industry SAAR of 16.8 to 17.0 (a bit lower than previous guidance as we recall), a 50 basis point increase in interest rates over the remainder of the year, 24.5 million shares outstanding, and a $0.10 impact from the new option expense accounting rule. Investors may remember we felt the guidance of $3.15 to $3.45 was rather aggressive, which given the 1Q results and as indicated with the new guidance, the company looks well on pace to exceed.
While we continue to think the company benefited a bit from abnormal demand in post hurricane markets, the results today clearly illustrate management is moving a lot faster in improving the operations. We hope some of these improvements are also being invested (through duplicative SG&A costs) into even better systems and processes.
In hindsight, while management has made incredible strides, I really think we (in the investment community) underestimated how much demand was created after the hurricanes came through the gulf coast region (favorably impacting Group 1's results). This is likely to create some tough headwinds this year for the company.
GPI 1-yr chart: