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How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
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.
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Penske Automotive ten years ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in October 2011 would be worth $5,880.76, or a gain of 488.08%, as of October 6, 2021, according to our calculations. This return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 279.86% and gold's return of 3.22% over the same time frame.
Looking ahead, analysts are expecting more upside for PAG.
Penske has become the largest dealership group for Freightliner in North America with the acquisition of Warner Truck Centers. Buyout of Kansas City Freightliner is set to fuel Penske's prospects further. Penske Transportation Solutions (PTS) joint venture and acquisition of Black Horse Carriers has also been boosting the prospects of Penske Automotive. CarShop expansion will further fuel the top-line growth of the firm. Investor-friendly moves of Penske instill optimism. However, Penske expects to witness shortage of vehicles amid supply chain disruption. The company is bearing the brunt of operating expenses for introduction of new tools and technologies. High debt levels are also a cause of concern. Also, rising competition and increasing price transparency can affect Penske’s profits. Thus, Penske currently has a cautious stance.
The stock is up 18.05% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 1 higher, for fiscal 2021. 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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