Penske Earnings: Strong Results Despite Numerous Stop-Sale Obstacles

Penske Automotive’s third-quarter results were solid thanks to management’s good handling of many new vehicle stop-sale orders imposed by manufacturers such as BMW, Lexus, Toyota, and Porsche. The BMW and Mini brands are 26% of retail automotive revenue for the company while Toyota and Lexus are 14% and Porsche 9%. These stop-sale orders only impacted certain vehicles within brands, and the company was able to procure other BMW vehicles not under stop-sale to prevent the quarter from being far worse. Diluted EPS of $3.39 was $0.02 short of the LSEG consensus and the metric received a $0.03 boost from foreign currency, but we’ve seen more severe impact this earnings season from these stop-sales at other public auto dealers we cover. We are raising our fair value estimate to $150 per share from $148 on slightly higher equity method income based on how 2024 is trending.