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Penske (PAG) Q2 Earnings Top, Sales Miss Estimates, Down Y/Y

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Penske Automotive Group, Inc. (PAG - Free Report) reported second-quarter 2020 adjusted earnings per share of 56 cents, beating the Zacks Consensus Estimate of 55 cents. However, the bottom line declined from the $1.42 per share recorded in the year-ago quarter. The auto retailer posted revenues of $3,651.1 million, missing the consensus mark of $3,798 million. The top line also declined from the year-ago level of $5,755.8 million. Heightened coronavirus woesresulted in dismal earnings and revenue numbers. 

The company’s gross profit decreased to $552.9 million from the prior-year quarter’s $867.8 million. During the second quarter, operating income plummeted 58.4% from the prior-year period to $71.4 million.

Same-store retail unit sales plunged 41.1% year over year to 72,916. Within the retail automotive segment, new vehicle revenues fell 38.8% year over year to $1,384.7 million and used-vehicle revenues declined 36% to $1,159.6 million.

Segmental Details

Revenues in Retail Automotive slipped to $3,153.5 million from the year-ago quarter’s $5,196.3 million. Gross profit of $466.3 million compared unfavorably with the $774.9 million reported in second-quarter 2019.

In the June-end quarter, revenues in the Retail Commercial Trucks segment decreased to $399.2 million from the year-ago period $426.8 million. Gross profit for the segment was $60.2 million, up from the year-ago quarter’s figure of $58.5 million. Revenues in the Commercial Vehicles Australia/Power Systems and Other declined to $98.4 million from the $132.7 million generated in the prior-year quarter. Gross profit came in at $26.4 million compared with the $34.4 million witnessed in second-quarter 2019.

Financial Position

Penske had cash and cash equivalents of $159.3 million as of Jun 30, 2020, up from $28.1 million as of Dec 31, 2019. As of Jun 30, 2020, long-term debt amounted to $2,054.1 million, down from $2,257 million as of Dec 31, 2019. For six months ended Jun 30, 2020, the company had free cash flow of $427.8 million.

Dividends &Share Repurchase

During the April-June quarter, the company suspended its cash dividends to help mitigate the impact of the coronavirus pandemic.

The company repurchased 1,023,288 shares as of Jun 30, 2020 for $34.2 million. As of Jun 30, 2020, Penske had a share-repurchase authorization of $170.6 million.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the auto sector include Sonic Automotive Inc. (SAH - Free Report) , AutoNation (AN - Free Report) and LCI Industries (LCII - Free Report) . While Sonic Automotive and AutoNation sport a Zacks Rank of 1 (Strong Buy), LCI Industries carries a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Sonic Automotive have climbed 38.6%, year to date, compared with the industry’s rise of 8%.

Shares of AutoNation have rallied 11.4%, year to date, compared with the industry’s gain of 7.9%.

Shares of LCI Industries have appreciated 15%, year to date, as against the industry’s decline of 7%.

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