Penske Earnings: Growth in New Vehicle Volume and Service Mitigates Used Vehicle Headwinds

Penske Automotive’s second quarter showed continued strong new light vehicle and new truck demand as well as double-digit retail automotive service gross profit growth. Diluted EPS fell 10.5% year over year to $4.41 but still beat the $4.19 Refinitiv consensus. Revenue set a quarterly record rising 8.1% to $7.5 billion, also beating consensus. We are raising our fair value estimate to $128 per share from $123 on the time value of money and a higher long-term return on capital assumption than previously modeled.