In the first half, GPI has added $1 billion in annual revenue from acquisitions and share repurchase reduced share count, Ward adds.

Going ahead, the analyst expects the variable gross margins to decline over the next two years; however, the performance will be above historical levels. 

In addition, Ward expects industry demand to be higher in both the U.S. and the U.K. For U.S. New Vehicle, the third-quarter sales are expected to reach 3.9 million units, up 16% from the year-earlier total.

For FY23, the analyst notes that U.S. New Vehicle sales are on track to reach 15.5 million units, above estimates of 14.5-15.0 million units heading into the year.

Overall, the analyst raised the 2023 EPS estimate of GPI to $44.40 per share from $44.00.

Ward also increased 2024 estimate of GPI to $44.35 from $44.25 to reflect the benefit of recent acquisitions, partially offset by the adverse impact of higher interest rates.

Price Action: GPI shares are trading higher by 1.4% to $257.63 on the last check Monday.