Group 1 Automotive (GPI) Moves 3.3% Higher: Will This Strength Last?

Zacks Equity Research
·2-min read

Group 1 Automotive (GPI) shares rallied 3.3% in the last trading session to close at $162.38. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 8.8% gain over the past four weeks.

With auto industry being highly cyclic, optimism surrounding economic recovery, nationwide deployment of COVID-19 vaccines and a hefty fiscal stimulus drove the auto retailer's stock price. Rising vehicle demand amid preference toward personal mobility and the firm’s omnichannel efforts to boost sales are fueling investors’ confidence on the stock.

Price and Consensus

Price Consensus Chart for Group 1 Automotive
Price Consensus Chart for Group 1 Automotive

This auto dealer is expected to post quarterly earnings of $4.49 per share in its upcoming report, which represents a year-over-year change of +170.5%. Revenues are expected to be $2.7 billion, up 0.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Group 1 Automotive, the consensus EPS estimate for the quarter has been revised 6.5% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on GPI going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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