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Penske Automotive Group Inc PAG

Morningstar Rating
$150.41 +0.27 (0.18%)
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Company Report

We See Penske as a Leader Among Premium Automotive Brand Retailers

Penske Automotive Group receives over 90% of its light-vehicle dealer revenue from import and luxury brands. This percentage is significantly higher than many dealers and helps mitigate the cyclical nature of auto sales; these brands have more-affluent customers who will not limit their discretionary spending during a downturn. Despite this wealthy customer, the firm's operating margin tends to be on the lower end of the publicly traded dealers. Penske gets less of its gross profit from higher-margin finance and insurance commissions than its peers, and selling, general, and administrative expenses as a percentage of gross profit are higher than the other public dealers. Penske cannot get as much finance business—a 100% gross margin business—as its peers because more of its customers lease vehicles or pay cash. The firm leases nearly all its real estate, so when excluding rent, Penske's SG&A ratio is competitive.

Price vs Fair Value

PAG is trading at a 6% premium.
Price
$150.41
Fair Value
$365.00
Uncertainty
High
1-Star Price
$164.80
5-Star Price
$45.20
Economic Moat
Qyztmr
Capital Allocation
Ctwgmqfwt

Bulls Say, Bears Say

Bulls

Auto dealerships are stable, profitable businesses with a diversified stream of earnings coming from parts, service, and used cars.

Bears

As publicly traded dealers command greater share in some markets, manufacturers may refuse to approve transfers of franchise rights at some dealerships, limiting acquisition-based growth.

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News

Trading Information

Previous Close Price
$150.14
Day Range
$147.08150.60
52-Week Range
$133.72180.84
Bid/Ask
$60.46 / $239.15
Market Cap
$10.08 Bil
Volume/Avg
315,668 / 195,977

Key Statistics

Price/Earnings (Normalized)
9.33
Price/Sales
0.35
Dividend Yield (Trailing)
1.97%
Dividend Yield (Forward)
1.97%
Total Yield
5.59%

Company Profile

Penske Automotive Group operates in nearly 20 us states and overseas. It has about 150 us light-vehicle stores including in Puerto Rico as well as 189 franchised dealerships overseas, primarily in the United Kingdom but also in Continental Europe and Japan. The company is the third-largest us-based dealership in terms of light-vehicle revenue and sells more than 35 brands, with over 90% of retail automotive revenue coming from luxury and import names. Other services, in addition to new and used vehicles, are parts and repair and finance and insurance. The firm's Premier Truck Group owns 44 truck dealerships selling mostly Freightliner and Western Star brands, and Penske owns 19 CarShop used-vehicle stores in the us and UK The company is based in Bloomfield Hills, Michigan.
Sector
Consumer Cyclical
Industry
Auto & Truck Dealerships
Stock Style Box
Mid Value
Total Number of Employees
28,000

Competitors

Valuation

Metric
PAG
KMX
SAH
Price/Earnings (Normalized)
9.3327.637.49
Price/Book Value
2.132.071.94
Price/Sales
0.350.470.13
Price/Cash Flow
8.7410.034.88
Price/Earnings
PAG
KMX
SAH

Financial Strength

Metric
PAG
KMX
SAH
Quick Ratio
0.210.390.24
Current Ratio
1.002.451.10
Interest Coverage
7.29−0.372.39
Quick Ratio
PAG
KMX
SAH

Profitability

Metric
PAG
KMX
SAH
Return on Assets (Normalized)
7.41%2.18%4.76%
Return on Equity (Normalized)
24.75%10.04%27.88%
Return on Invested Capital (Normalized)
10.86%−0.45%8.25%
Return on Assets
PAG
KMX
SAH
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SAH
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