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Penske Automotive (PAG) Q4 Earnings Beat Estimates, Rise Y/Y

Zacks Equity Research

Penske Automotive Group, Inc. PAG reported fourth-quarter 2019 adjusted earnings per share of $1.25 compared with $1.11 recorded in the year-ago quarter. Also, the bottom line beat the Zacks Consensus Estimate of $1.20. Despite weak market conditions in the U.K., largely due to Brexit, the company managed to perform well in the fourth quarter on the back of robust U.S. retail operations along with synergies from the Warner Truck Group acquisition.

Penske Automotive, which belongs to the Retail and Whole Sales industry, posted revenues of $5,881 million for the quarter ended Dec 31, 2019. The figure rose from the year-ago quarter’s level of $5,439 million. Further, it beat the Zacks Consensus Estimate of $5,693 million.

The company’s gross profit increased to $866.5 million from $808.1 million in the prior-year quarter. During the quarter under review, operating income increased 11.9% to $152.8 million.

Same-store retail unit sales increased 1.9% year over year to 118,598. Within the retail automotive segment, new-vehicle revenues rallied 6.2% year over year to $2.4 billion while used-vehicle revenues increased 3.7% year over year to $1.67 billion.

Segmental Details

Revenues in the Retail Automotive rose to $5,162.7 million from $4949.2 million in the year-ago quarter. Gross profit was $755.1 million compared with $720.1 million in the fourth quarter of 2018. It also topped the Zacks Consensus Estimate of $722 million in the quarter.

In the quarter, revenues in the Retail Commercial Trucks segment increased to $599.1 million from $358 million in the year-ago quarter. Gross profit for the segment was $78.3 million, which missed the Zacks Consensus Estimate of $82 million. However, it increased from the year-ago figure of $54.7 million in the quarter.

Revenues in the Commercial Vehicles Australia/Power Systems and Other declined to $119.6 million from $132.1 million in the prior-year quarter. Gross profit was $33.1 million compared with $33.3 million in the fourth quarter of 2018. It missed the Zacks Consensus Estimate of $36.10 million in the quarter.

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

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

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

Financial Position

Penske Automotive had cash and cash equivalents of $28.1 million as of Dec 31, 2019, down from $39.4 million as of Dec 31, 2018. As of Dec 31, 2019, long-term debt amounted to $2.26 billion, up from $2.12 billion as of Dec 31, 2018. The debt-to-capital ratio was 44.53%.

Share Repurchase

The company repurchased 3,986,836 shares for $174.1 million or an average of $43.68 per share in 2019. As of Dec 31, 2019, the company had share repurchase authorization of approximately $200.0 million.

Zacks Rank & Stocks to Consider

Currently, Penske Automotive carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Auto-Tires-Trucks sector include Gentherm Inc THRM, Gentex Corporation GNTX and SPX Corporation SPXC, each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Gentherm has a projected earnings growth rate of 20.60% for the ongoing year. Its shares have gained 17.8% over the past year.

Gentex has an estimated earnings growth rate of 7.32% for 2020. The company’s shares have appreciated 54.6% in a year’s time.

SPX has an expected earnings growth rate of 8.09% for the current year. The stock has rallied 71.7% in the past year.

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