Penske Meets Expectations

Penske Automotive Group, Inc. (PAG - Analyst Report) posted a net income of $19.3 million or 21 cents per share. With this, the company has exactly met the Zacks Consensus Estimate during the quarter. The profit was driven by strong performance in the U.K., especially in the premium/luxury retail businesses, as well as the continuing benefit from our cost-saving initiatives. 

Revenue in the quarter increased 13.4% to $2.4 billion. Same-store retail revenue increased 15.5% to $2.2 million. New Vehicle revenue rose 21% to $1.26 billion while Used Vehicle revenue went up 23% to $648 million.
 
In 2009, Penske’s profit declined to $80.5 million or 88 cents per share from $92.7 million or 99 cents per share in 2008. However, the profit was slightly higher than the Zacks Consensus Estimate of 85 cents per share. Revenue in the year ebbed 18.2% to $9.5 billion. Same-store retail revenue increased 18.8% to $8.2 million. 

New Vehicle revenue fell 21% to $4.66 billion while Used Vehicle revenue went up 9% to $2.6 billion during 2009. Penske wholesaled 13,772 units of smart USA in the year, including 998 units in the fourth quarter. 

Penske wholesaled 3,401 units of smart USA vehicles, a decline from 6,683 units in the prior-year quarter. To fight the difficult new vehicle sales environment in the U.S., smart USA introduced new finance and marketing campaigns in October. For the year, smart USA anticipates to wholesale as many as 15,700 units. 

Penske had cash and cash equivalents of $14 million as of December 31, 2009, a decline from $17 million as of December 31, 2008. Long-term debt amounted to $946 million as of that date. The long-term debt to capitalization ratio stood at 50%. 

Penske Automotive Group, Inc., based in Bloomfield Hills, Michigan, was established in 1990 and is the second-leading automotive retailer in the U.S. Following the acquisition of dealerships, Penske Automotive operates 160 franchises in 17 states and Puerto Rico and 150 franchises located internationally, primarily in the U.K as well as Germany and Mexico.
 
Penske is poised for earnings growth driven by its ability to identify, acquire and integrate dealerships. However, it faces a challenging used vehicle market due to the relative affordability of new vehicles.
 
Despite the stable results, the market responded ambiguously, reflecting a fluctuation in the company’s stock price.

Read the full analyst report on PAG