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Penske Automotive (PAG) Q3 Earnings & Revenues Beat Estimates

Zacks Equity Research

Penske Automotive Group, Inc. PAG reported third-quarter 2019 adjusted earnings per share of $1.42 compared with $1.40 recorded in the year-ago quarter. Also, the bottom line beat the Zacks Consensus Estimate of $1.41. Despite the weak market conditions in the U.K., largely due to Brexit, the company managed to perform well in the third quarter on synergies from the Warner Truck Group acquisition.

Penske Automotive, which belongs to the Retail and Whole Sales industry, posted revenues of $5.97 billion for the quarter ended Sep 30, 2019. The figure rose from the year-ago quarter’s level of $5.66 billion. Further, it beat the Zacks Consensus Estimate of $5.77 billion.

The company’s gross profit rallied to $869.7 million from $852.6 million in the prior-year quarter. During the quarter under review, operating income increased 3.4% to $169.4 million.

Same-store retail unit sale increased 0.9% year over year to 129,834. Within the retail automotive segment, new-vehicle revenues declined 0.8% year over year to $2.32 billion while used-vehicle revenues remained flat at $1.82 billion year over year.

Segmental Details

Revenues in the Retail Automotive rose to $5155.4 million from $5148.5 million in the year-ago quarter.

In the quarter, Penske became the largest dealership group for Freightliner in North America with the acquisition of Warner Truck Centers, representing six dealership locations in Utah and Idaho which led the revenues in the Retail Commercial Trucks segment increase to $692.3 million from $385.3 million in the year-ago quarter.

Revenues in the Commercial Vehicles Australia/Power Systems and Other declined to $119.9 million from $124.8 million in the prior-year quarter.

Penske Automotive Group, Inc. Price and Consensus

Penske Automotive Group, Inc. Price and Consensus

Penske Automotive Group, Inc. price-consensus-chart | Penske Automotive Group, Inc. Quote

Financial Position

Penske Automotive had cash and cash equivalents of $77.5 million as of Sep 30, 2019, up from $39.4 million recorded as of Dec 31, 2018. As of Sep 30, 2019, long-term debt amounted to $2.28 billion, up from $2.12billion as of Dec 31, 2018. The debt-to-capital ratio stands at 46.45%.

Dividend and Share Repurchase

On Oct 16, the company announced that its Board of Directors increased the dividend to its common stock shareholders to 41 cents per share. This marked the 34th consecutive increase in quarterly dividend.

In third-quarter 2019, the company repurchased 1,021,622 shares for $43.6 million or an average of $42.66 per share. In September 2019, the management increased the share repurchase authorization to $200 million.

Zacks Rank & Stocks to Consider

Currently, Penske Automotive has a Zacks Rank #3 (Hold).

A few better-ranked stocks worth considering are Kinross Gold Corporation KGC, sporting a Zacks Rank #1 (Strong Buy), Aaron's, Inc. AAN and Alamos Gold Inc. AGI, both carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross Gold has an expected earnings growth rate of 210% for 2019. The company’s shares have rallied 78% in the past year.

Aaron's has an estimated earnings growth rate of 17.56% for the ongoing year. The company’s shares have surged roughly 65.8% in a year’s time.

Alamos Gold has a projected earnings growth rate of a whopping 340% for the current year. Its shares have gained around 28% over the past year.

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