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For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in Penske Automotive (PAG) ten years ago? It may not have been easy to hold on to PAG for all that time, but if you did, how much would your investment be worth today?
Penske Automotive's Business In-Depth
With that in mind, let's take a look at Penske Automotive's main business drivers.
Established in 1990, Penske Automotive Group, Inc., based in Bloomfield Hills, MI, engages in the operation of automotive and commercial truck dealerships in the United States, Canada and Western Europe. The company also distributes commercial vehicles, diesel engines, gas engines, power systems and related parts and services principally in Australia and New Zealand. It employs more than 27,000 people across the globe.
The company also offers higher margin products such as finance, insurance and vehicle service contracts; maintenance repair services; replacement parts and aftermarket automotive products.
The company operates under three reportable segments, Retail Automotive, Commercial Truck and Commercial Vehicles Australia/Power Systems.
Retail Automotive which deals with retail automotive dealership operations generated 87.9% of revenues in 2020. Per the company, it is the second largest automotive retailer headquartered in the United States.
Commercial Truck, which consists of the U.S. retail commercial truck dealership operations generated 9.9% of the revenues in 2020. The company operates a heavy and medium-duty truck dealership group known as Premier Truck Group (PTG) with locations in Texas, Oklahoma, Tennessee, Georgia, and Canada.
Commercial Vehicles Australia/Power Systems and Other generated 2.2% of the revenues in 2020. The company is the exclusive importer and distributor of Western Star heavy-duty trucks (a Daimler brand), MAN heavy and medium-duty trucks and buses (a VW Group brand), and Dennis Eagle refuse collection vehicles.
In 2020, its retail automotive brand mix consisted of 73% Premium, 21% Volume non-U.S., 5% Used-Vehicle Stand-Alone and 1% the U.S. big-three.
Of late, the company has been expanding its presence in the U.K., its second largest market, with an aim to capitalize on the highly fragmented used automotive retail segment and reinforce its position in the country.
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Penske Automotive a decade ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in May 2011 would be worth $4,170.75, or a 317.08% gain, as of May 11, 2021, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
Compare this to the S&P 500's rally of 208.62% and gold's return of 16.37% over the same time frame.
Going forward, analysts are expecting more upside for PAG.
Penske is anticipated to benefit from acquisitions, and the opening of dealerships in U.S. as well as European markets. The firm has become the largest dealership group for Freightliner in North America with the acquisition of Warner Truck Centers, thus diversifying its business. Buyout of Kansas City Freightliner is set to expand Penske’s Premier Truck Group arm’s scale and bolster top line growth. The firm's increasing digital capabilities and cost cut initiatives amid coronavirus crisis is likely to aid its near-term margins. Its favorable brand mix with strong off-lease opportunities along with used vehicle expansion strategy is likely to boost the earnings going forward. Penske's investor friendly moves via dividends and buybacks boost shareholders' confidence. Given the tailwinds, the stock is viewed as a lucrative bet.
Over the past four weeks, shares have rallied 8.24%, and there have been 5 higher earnings estimate revisions in the past two months for fiscal 2021 compared to none lower. The consensus estimate has moved up as well.
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Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report
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