Penske Beats on Earnings in 1Q

Zacks

Penske Automotive Group Inc. (PAG) posted a 14.5% increase in earnings per share to 63 cents in the first quarter of 2013 from 55 cents in the corresponding quarter last year. Earnings in the quarter exceeded the Zacks Consensus Estimate by a penny. Net profits increased 13.9% to $56.9 million in the quarter from $49.9 million a year ago.

Revenues improved 7.7% to $3.40 billion, missing the Zacks Consensus Estimate of $3.45 billion. Same-store retail revenues rose 7.4%. The year-over-year rise in revenues was driven by a 9.9% increase in retail sales to 85,821 units, including a 6.8% increase to 82,695 units on a same-store basis. Sales went up 12.7% in the U. S and 4.5% internationally.

Gross profits improved 7.9% to $533.0 million from $493.9 million in the first quarter of 2012. Operating profit augmented 11.7% to $105.2 million from $94.2 million a year ago.

New Vehicle revenues went up 12.9% to $1.7 billion on a 9.7% rise in sales to 45,745 units. Used Vehicle revenues went up 7.4% to $1.0 billion based on a 10.2% increase in sales to 40,076 units. Revenues in the Service and Parts segment rose 6.8% to $383.5 million.

Meanwhile, revenues in the Fleet and Wholesale Vehicle segment decreased 24% to $181.9 million and in the Finance and Insurance segment rose 11.5% to $86.7 million.

In the first quarter of 2013, the company repurchased 410,000 shares for $12.7 million at an average price of $30.93 per share. Penske has authorized shares worth $85.6 million remaining under its existing repurchase program.

Penske had cash and cash equivalents of $31.6 million as of Mar 31, 2013, a decrease from $43.8 million as of Dec 31, 2012. Long-term debt amounted to $891.7 million as of Mar 31, 2013, down from $937.5 million as of Dec 31, 2012. Long-term debt to capitalization ratio was 40.6% versus 41.6% a year ago.

Penske Automotive Group sells new and previously owned vehicles along with finance and insurance products. It operates 342 retail automotive franchises, offering 40 different brands and 30 collision repair centers. Apart from its franchises in the U.S. and Europe, the company offers repair and maintenance services. Currently, it retains a Zacks Rank #3 (Hold).

Some other stocks that are performing well in the industry where Penske operates include Asbury Automotive Group, Inc. (ABG), AutoNation Inc. (AN) and Lithia Motors Inc. (LAD). All these companies carry a Zacks Rank #2 (Buy).
 

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