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Why Is Penske (PAG) Up 16% Since Last Earnings Report?
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It has been about a month since the last earnings report for Penske Automotive (PAG - Free Report) . Shares have added about 16% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Penske due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Penske Beats on Q3 Earnings
Penske Automotive reported third-quarter 2022 adjusted earnings of $4.61 per share, increasing 3% year over year from $4.46 and surpassing the Zacks Consensus Estimate of $4.38. Higher-than-expected gross profit in the Retail Automotive and Retail Commercial Truck segments resulted in this outperformance.
The auto retailer registered net sales of $6,920.7 million, which topped the Zacks Consensus Estimate of $6,855 million. The top line rose 7% from the year-ago quarter.
Penske’s gross profit in the reported quarter increased 1.8% on a year-over-year basis to $1,186.9 million. The operating income went down 4% to $362.7 million.
In the reported quarter, same-store retail units declined 9.2% year over year to 103,937. Within the Retail Automotive segment, same-store new-vehicle revenues edged down 1.3% to $2,245.8 million, and same-store used-vehicle revenues fell 7.9% to $2,112.9 million.
Segmental Performance
In the reported period, revenues in the Retail Automotive segment came in at $5,757.8 million, increasing 2% from a year ago but missing the consensus mark of $5,902 million. Gross profit of $1,006.9 million declined 0.4% but crossed the consensus mark of $967 million.
Revenues in the Retail Commercial Truck segment increased 42% to $1,019.5 million and exceeded the consensus mark of $812 million. Gross profit in the segment was $139.7 million, rising 21.2% from the year-earlier quarter’s figure and beating the consensus mark of $132 million.
The Commercial Vehicles Australia/Power Systems segment’s revenues in the reported quarter decreased 1.2% to $143.4 million and lagged the consensus mark of $156 million. Gross profit came in at $40.3 million, rising 2% from the 2021 level but missing the Zacks Consensus Estimate of $44.48 million.
Financial Tidbits
In the quarter under review, SG&A costs totaled $792.7 million, flaring up 4.6% year over year. Penske had cash and cash equivalents of $92.3 million as of Sep 30, 2022, down from $100.7 million in 2021 end. The long-term debt amounted to $1,561.9 million, up from $1,392 million as of Dec 31, 2021.
In the reported quarter, PAG repurchased 2.8 million shares of common stock for $309.4 million. PAG also increased share repurchase authorization by $250 million. As of Oct 25, 2022, $268.2 million remained available for repurchase under its existing share repurchase authorization.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Penske has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Penske has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Penske belongs to the Zacks Automotive - Retail and Whole Sales industry. Another stock from the same industry, Lithia Motors (LAD - Free Report) , has gained 9.9% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Lithia Motors reported revenues of $7.3 billion in the last reported quarter, representing a year-over-year change of +18.3%. EPS of $11.08 for the same period compares with $11.21 a year ago.
Lithia Motors is expected to post earnings of $10.10 per share for the current quarter, representing a year-over-year change of -11.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.2%.
Lithia Motors has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Why Is Penske (PAG) Up 16% Since Last Earnings Report?
It has been about a month since the last earnings report for Penske Automotive (PAG - Free Report) . Shares have added about 16% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Penske due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Penske Beats on Q3 Earnings
Penske Automotive reported third-quarter 2022 adjusted earnings of $4.61 per share, increasing 3% year over year from $4.46 and surpassing the Zacks Consensus Estimate of $4.38. Higher-than-expected gross profit in the Retail Automotive and Retail Commercial Truck segments resulted in this outperformance.
The auto retailer registered net sales of $6,920.7 million, which topped the Zacks Consensus Estimate of $6,855 million. The top line rose 7% from the year-ago quarter.
Penske’s gross profit in the reported quarter increased 1.8% on a year-over-year basis to $1,186.9 million. The operating income went down 4% to $362.7 million.
In the reported quarter, same-store retail units declined 9.2% year over year to 103,937. Within the Retail Automotive segment, same-store new-vehicle revenues edged down 1.3% to $2,245.8 million, and same-store used-vehicle revenues fell 7.9% to $2,112.9 million.
Segmental Performance
In the reported period, revenues in the Retail Automotive segment came in at $5,757.8 million, increasing 2% from a year ago but missing the consensus mark of $5,902 million. Gross profit of $1,006.9 million declined 0.4% but crossed the consensus mark of $967 million.
Revenues in the Retail Commercial Truck segment increased 42% to $1,019.5 million and exceeded the consensus mark of $812 million. Gross profit in the segment was $139.7 million, rising 21.2% from the year-earlier quarter’s figure and beating the consensus mark of $132 million.
The Commercial Vehicles Australia/Power Systems segment’s revenues in the reported quarter decreased 1.2% to $143.4 million and lagged the consensus mark of $156 million. Gross profit came in at $40.3 million, rising 2% from the 2021 level but missing the Zacks Consensus Estimate of $44.48 million.
Financial Tidbits
In the quarter under review, SG&A costs totaled $792.7 million, flaring up 4.6% year over year. Penske had cash and cash equivalents of $92.3 million as of Sep 30, 2022, down from $100.7 million in 2021 end. The long-term debt amounted to $1,561.9 million, up from $1,392 million as of Dec 31, 2021.
In the reported quarter, PAG repurchased 2.8 million shares of common stock for $309.4 million. PAG also increased share repurchase authorization by $250 million. As of Oct 25, 2022, $268.2 million remained available for repurchase under its existing share repurchase authorization.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Penske has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Penske has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Penske belongs to the Zacks Automotive - Retail and Whole Sales industry. Another stock from the same industry, Lithia Motors (LAD - Free Report) , has gained 9.9% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Lithia Motors reported revenues of $7.3 billion in the last reported quarter, representing a year-over-year change of +18.3%. EPS of $11.08 for the same period compares with $11.21 a year ago.
Lithia Motors is expected to post earnings of $10.10 per share for the current quarter, representing a year-over-year change of -11.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.2%.
Lithia Motors has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.