No Biggie: Group 1's Outlook a Bit Lower Than Forecast

| About: Group 1 (GPI)
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As the company prepares to present later this week to investors at the auto show, Group 1 released a press release yesterday saying they felt they could earn between $4.00 to $4.25 in earnings per share in 2007. This was below the published Thomson consensus of analyst estimates of $4.28 (according to the Associated Press). My recent estimate was for EPS of $4.35.

Of course investors went into their usual “reactionary” mode, dropping the stock a couple bucks at one point in the morning yesterday. But it was encouraging to see the stock close almost unchanged by the end of the day. True, the guidance is a bit below where I expect, and depending on what management says on the 4Q06 conference call, I may end up having to revise my 2007 forecast as well.

But the mean of their 2007 range is ~$4.13, growth of ~13% from the $3.65 I expect them to earn in 2006. Not a bad outlook considering how difficult everyone expects the auto environment to be in 2007 (which includes management expecting an industry selling rate of only 16.3 million units). And zero incremental acquisitions! So I don’t see a reason to panic when I think about the more important number (my 2012 forecast of $7.96).

GPI shares are up $2.45, or 4.93%, to $52.18.

GPI 1-yr chart:

GPI 1-yr chart