Retailers continue their value run-up in a rally that seems to validate the public dealership group model.
The segment has yet to regain its pre-1998 highs, but retailers jumped by 14.5 percent in the first quarter, 87.6 percent in the past year and 38.6 percent in the past three years. The group thrashed the indices for those periods.
Dealership groups have benefited from strong used-car sales and profitable parts and service business, and new-car sales have outpaced expectations. Many of the retail companies have integrated operations to achieve cost efficiencies, PricewaterhouseCoopers experts said, and are focusing on expansion.
"Some of them have a lot available under their credit line, and many of them are expressing intent to use that capital (to finance) other waves of acquisitions," said Jay Singer, a PricewaterhouseCoopers director. The key thing, he said, is whether they will be more effective this time at integrating the companies they're acquiring.
That access to capital, plus moves such as Circuit City's plans to spin off CarMax as a separately traded public company, seem to suggest that public retailers can succeed, Singer said.
Group 1 Automotive Inc. led the quarterly list with a 37 percent return. Sonic Automotive Inc. topped the one-year list, and CarMax led the three-year list. Budget Group lagged the index.