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Penske's (PAG) Earnings Beat Estimates in Q4, Sales Rise Y/Y

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Penske Automotive Group PAG reported fourth-quarter 2021 adjusted earnings of $4.10 per share, increasing 65% year over year and surpassing the Zacks Consensus Estimate of $3.67. Higher-than-expected gross profit in the Retail Commercial Truck and Commercial Vehicles Australia/Power Systems segments resulted in this outperformance.

The auto retailer registered net sales of $6,296.1 million, outpacing the Zacks Consensus Estimate of $6,227.5 million. The top line also rose 8.3% from the comparable year-ago period’s levels.

The company’s gross profit in the reported quarter increased 31.3% on a year-over-year basis to $1,179.2 million. The operating income also rose 46.9% from the prior-year quarter’s level to $356.3 million.

For the December-end quarter, same-store retail unit sales declined 9.5% year over year to 97,816. Within the Retail Automotive segment, same-store new-vehicle revenues edged down 8.4% year over year to $2,260.4 million, while same-store used-vehicle revenues rose 21.7% to $2,020.7 million.

Segmental Performance

In the reported period, revenues in the Retail Automotive segment came in at $5,473.9 million, increasing 7.3% from fourth-quarter 2020 levels but missing the consensus mark of $5,656 million. Gross profit of $1,019 million increased 29.4% year over year but missed the consensus mark of $1,028 million.

Revenues in the Retail Commercial Truck segment increased 18.8% to $688.4 million. However, the figure lagged the consensus mark of $713 million. Gross profit in the segment was $118.9 million, up 50.8% from the year-earlier quarter’s figure and beating the consensus mark of $114 million.

The Commercial Vehicles Australia/Power Systems segment’s revenues in the reported quarter totaled $133.8 million, up 1.4% from the year-ago quarter’s levels but lagging the consensus mark of $144 million. Gross profit came in at $41.3 million, rising 27.5% from the 2020 level and surpassing the Zacks Consensus Estimate of $36.7 million.

Financial Tidbits

In the quarter under review, SG&A costs totaled $791.1 million, up 26.4% year over year. Penske had cash and cash equivalents of $100.7 million as of Dec 31, 2021, up from $49.5 million at 2020 end. The long-term debt amounted to $1,392 million, down from $1,602.1 million as of Dec 31, 2020.

In 2021, PAG returned more than $436 million to shareholders through share repurchases ($293.5 million) and cash dividends ($142.5 million). As of Feb 8, 2022, nearly $194.3 million remains available to repurchase additional shares under its existing share repurchase authorization.

Zacks Rank & Other Key Picks

Currently, Penske has a Zacks Rank #2 (Buy).

Some other top-ranked players in the auto space are Goodyear Tire GT and Tesla TSLA, each sporting a Zacks Rank #1(Strong Buy) and Genuine Parts GPC, carrying a Zacks Rank #2 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Goodyear has an expected earnings growth rate of 51.7% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 1.1% upward in the past 60 days.

Goodyear’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. GT pulled off a trailing four-quarter earnings surprise of 228.5%, on average. The stock has also rallied 51.8% over a year.

Tesla has an expected earnings growth rate of 35.21% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 5% upward in the past 60 days.

Tesla’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters. TSLA pulled off a trailing four-quarter earnings surprise of 25.38%, on average. The stock has also rallied 11.5% over a year.

Genuine Parts has an expected earnings growth rate of 10.03% for the current year. The Zacks Consensus Estimate for earnings for the current year has been revised around 2.2% upward in the past 60 days.

Genuine Parts’ earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. GPC pulled off a trailing four-quarter earnings surprise of around 16%, on average. The stock has also rallied 26.8% over a year.


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