Penske Automotive Group Inc. (PAG - Free Report) announced the acquisition of dealerships of Frank Smith Toyota-Scion of Toyota Motor Corporation (TM - Free Report) and Hyundai in Pharr, Texas. These dealerships are expected to generate $200 million additional revenues annually.
The dealerships are located in Rio Grande Valley area. The 18-acre site has a 28,000 square feet, 38-service bay collision repair center and another 8,500-square feet delivery/detail center. This provides a campus-style environment for operation.
Penske expects that these new dealerships will complement the existing dealerships in Austin, Houston, and Round Rock, Texas. These dealerships will be covering the greater metropolitan area of McAllen, Texas. Thus, the acquired dealerships will be providing a new market for Penske together with enhancing the opportunities of the company in Texas.
Penske posted a 21.7% increase in adjusted earnings per share to 73 cents in the third quarter of 2013 from 60 cents in the corresponding quarter last year. The results also exceeded the Zacks Consensus Estimate by 3 cents.
Revenues improved 14.6% year over year to $3.8 billion, beating the Zacks Consensus Estimate of $3.7 billion. The year-over-year rise in revenues was driven by a 13.5% increase in retail sales.
Penske is one of the prominent automotive retailers in the U.S. along with AutoNation Inc. (AN - Free Report) . It sells new and previously-owned vehicles along with finance and insurance products. Apart from its franchises in the U.S. and Europe, the company offers repair and maintenance services.
Recently, Lithia Motors Inc. (LAD - Free Report) , anoher major automotive retailers in the U.S., announced the acquisition of Diablo Subaru of Walnut Creek, Calif. This store is expected to generate $50 million additional revenues annually. Lithia expects that this store will eventually turn out to be among the largest Subaru stores in the U.S.
Currently, Penske retains a Zacks Rank #2 (Buy).