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Penske (PAG) Q4 Earnings Beat on Robust New Vehicle Sales

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Penske Automotive Group, Inc. (PAG - Free Report) reported fourth-quarter 2020 adjusted earnings of $2.49 per share, increasing a whopping 99.2% year over year and surpassing the Zacks Consensus Estimate of $2.11. Markedly, higher-than-expected revenues and gross profit from the new vehicle retail unit resulted in this outperformance. Revenues and gross profit came in at $2,480.7 million and $215.2 million, beating the Zacks Consensus Estimate of $2,423 million and $187 million, respectively.

The auto retailer registered net sales of $5,812.1 million, outpacing the Zacks Consensus Estimate of $5,719 million. However, the top-line figure inched down 1.2% from the comparable year-ago period.

The company’s gross profit for the reported quarter increased 3.7% on a year-over-year basis to $898.4 million. For the fourth quarter, operating income also jumped 58.7% from the prior-year period to $242.5 million.

For the December-end quarter, same-store retail unit sales slid 8.6% year over year to 107,652. Within the Retail Automotive segment, same-store new vehicle revenues rose 3.5% year on year to $2,471.8 million, while same-store used-vehicle revenues slipped 1.1% to $1,655.3 million.

Segmental Performance

During the October-December period, revenues in the Retail Automotive segment came in at $5,100.7 million, down from $5,162.7 million in fourth-quarter 2019. Nonetheless, gross profit of $787.2 million compared favorably with $755.1 million reported in the year-ago quarter.

In the December-end quarter, revenues in the Retail Commercial Truck segment decreased to $579.4 million from the year-ago level of $599.1 million. Gross profit for the segment was $78.8 million, marginally higher than the year-earlier level of $78.3 million.

Revenues in the Commercial Vehicles Australia/Power Systems and Other for the reported quarter increased 10.4% year over year to $132 million. Gross profit came in at $32.4 million compared with $33.1 million recorded in fourth-quarter 2019.

Financial Tidbits

For the quarter under review, SG&A costs totaled $625.8 million, reflecting a decline of 8.7% year over year. Penske — whose peers include AutoNation (AN - Free Report) , Lithia Motors (LAD - Free Report) and Sonic Automotive (SAH - Free Report) — had cash and cash equivalents of $49.5 million as of Dec 31, 2020, up from $28.1 million in the corresponding period of 2019. Long-term debt amounted to $1,602.1 million, down from $2,257 million as of Dec 31, 2019.

Penske raised quarterly dividend by a penny to 43 cents a share, payable on Mar 1 to shareholders of record as of Feb 10, 2021. In 2020, the company repurchased 1,027,736 shares for $34.4 million. The Zacks Rank #3 (Hold) company has $170.6 million remaining under the current share-repurchase authorization. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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