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What's in the Cards for Penske (PAG) This Earnings Season?

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Penske Automotive Group PAG is slated to release fourth-quarter 2021 results on Feb 9, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share and revenues is pegged at $3.67 and $6.31 billion, respectively.

The auto retailer came up with better-than-anticipated results in the last reported quarter on higher-than-expected gross profit across all segments. Over the preceding four quarters, the company topped estimates on all occasions, with the average being 20.3%. This is depicted in the graph below:

Penske Automotive Group, Inc. Price and EPS Surprise

Penske Automotive Group, Inc. Price and EPS Surprise
Penske Automotive Group, Inc. Price and EPS Surprise

Penske Automotive Group, Inc. price-eps-surprise | Penske Automotive Group, Inc. Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for Penske’s fourth-quarter earnings per share has been revised upward by 5 cents in the past seven days. The bottom-line projection implies year-on-year growth of 47.4%. Further, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year increase of 8.5%.

Earnings Whispers

Our proven model predicts an earnings beat for Penske this time around as well. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This has been elaborated below.

Earnings ESP: Penske has an Earnings ESP of +6.39%. This is because the Most Accurate Estimate comes in 24 cents higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Penske currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors at Play

Courtesy of economic recovery from the pandemic lows and preference for personal mobility, demand for vehicles has been on the rise, which is likely to have aided sales of Penske. Robust volume, product margins and the expanding Class 8 commercial truck market are likely to buoy its fourth-quarter 2021 results.

The buyout of Kansas City Freightliner, completed during second-quarter 2021, is expected to have boosted Penske’s fourth-quarter revenues. In October, Penske acquired the remaining 51% of its Japan-based joint venture of premium luxury automotive brands, which is also likely to have enhanced PAG’s performance.

Encouragingly, the auto retailer is expected to post a year-over-year increase in fourth-quarter revenues and gross margins across all units.

The Zacks Consensus Estimate for the to-be-reported quarter’s revenues from the Retail Automotive segment — which accounts for the bulk of Penske’s overall top line — is pegged at $5,791 million, indicating a rise from the $5,101 million recorded in the year-ago quarter. Also, gross profit for the segment is pinned at $1,035 million, calling for a surge from $787 million reported in the prior-year period.

For the December-end quarter, the consensus mark for revenues in the Retail Commercial Truck segment stands at $701 million, suggesting growth of $579 million from the year-ago level. In addition, gross profit for the segment is pinned at $112 million, calling for an increase from the year-earlier level of $79 million.

The consensus mark for revenues in the Commercial Vehicles Australia/Power Systems and Other for fourth-quarter 2021 is pegged at $144 million, suggesting growth from the $132 million recorded in fourth-quarter 2020. The same for gross profit for the segment is $36.7 million, implying an uptick of 13.2% year over year.

Other Stocks With Favorable Combinations

Here are a few other auto retailers, which, according to our model, also have the right combination of elements to post an earnings beat for the quarter to be reported:

Lithia Motors LAD has an Earnings ESP of +5.18% and a Zacks Rank #2. The company is set to report fourth-quarter 2021 earnings on Feb 9.

The Zacks Consensus Estimate for Lithia’s to-be-reported quarter’s earnings and revenues is pegged at $9.99 per share and $6.32 billion, respectively. Encouragingly, LAD surpassed earnings estimates in the last four quarters, with an average surprise of 29.1%.

Group 1 Automotive GPI has an Earnings ESP of +0.63% and a Zacks Rank #2. The company is set to report fourth-quarter 2021 earnings on Feb 10.

The Zacks Consensus Estimate for Group 1’s to-be-reported quarter’s earnings and revenues is pegged at $9.06 per share and $3.48 billion, respectively. GPI surpassed earnings estimates in three of the last four quarters and missed once, with an average of 7.96%.

Asbury Automotive ABG has an Earnings ESP of +3.38% and a Zacks Rank #1. The company is set to report fourth-quarter 2021 earnings on Feb 15.

The Zacks Consensus Estimate for Asbury’s to-be-reported quarter’s earnings and revenues is pegged at $5.86 per share and $2.45 billion, respectively. ABG surpassed earnings estimates in the last four quarters, with an average of 24.3%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report

Group 1 Automotive, Inc. (GPI) : Free Stock Analysis Report

Asbury Automotive Group, Inc. (ABG) : Free Stock Analysis Report

Lithia Motors, Inc. (LAD) : Free Stock Analysis Report

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