Wachovia Downgrades Group 1 Automotive (GPI) to Market Perform; Fairly Valued at Current Level

June 3, 2009 9:15 AM EDT

Wachovia downgrades Group 1 Automotive, Inc. (NYSE: GPI) from Outperform to Market Perform. Valuation Range: $23 to $24

Wachovia analyst says, "In the past few months, the shares have outperformed the market by a wide margin (240% vs. 21%). Our change in rating reflects valuation as the shares now trade at 17.5x our 2009 EPS estimate (8.9x '09 EBITDA) and 12.4x our 2010 EPS estimate (7.9x '10 EBITDA)...We believe mgmt is doing a solid job of positioning the company for the longterm. In our view, Q4 '08 and Q1 '09 results demonstrated the strength of the management team as the company was profitable in both quarters and exceeded expectations. Covenant risk has been greatly reduced and we expect the company to capitalize on dealer consolidation trends. We believe GPI shares should receive one of the highest multiples in the group because of its strong brand mix, high earnings quality and potential for operating margin expansion...However, we believe the shares are fairly valued at current levels."

To see more analyst ratings on GPI Click Here.

Group 1 Automotive, Inc. is an operator in automotive retail industry. As of December 31, 2008, the Company owned and operated 127 franchises at 97 dealership locations and 23 collision service centers in the United States and six franchises at three dealerships and two collision centers in the United Kingdom.

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