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Penske (PAG) Q2 Earnings Top Estimates, Revenues Decline Y/Y

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Penske Automotive Group (PAG - Free Report) reported second-quarter 2022 adjusted earnings of $4.93 per share, increasing 10.3% year over year from $4.47 and surpassing the Zacks Consensus Estimate of $4.35. 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 $6,906.9 million, which lagged the Zacks Consensus Estimate of $6,960 million. The top line also inched down 1.2% from the year-ago quarter.

Penske Automotive’s gross profit in the reported quarter increased 4.6% on a year-over-year basis to $1,237 million. The operating income went down 3.7% to $387.6 million.

In the reported quarter, same-store retail units declined 17.1% year over year to 109,459. Within the Retail Automotive segment, same-store new-vehicle revenues edged down 17.8% to $2,307 million, and same-store used-vehicle revenues fell 1.6% to $2,278 million.

Segmental Performance

In the reported period, revenues in the Retail Automotive segment came in at $5,997.3 million, falling 3.2% from a year ago and missing the consensus mark of $6,031 million. Gross profit of $1,060 million rose 1.9% year over year and crossed the consensus mark of $1,037 million.

Revenues in the Retail Commercial Truck segment increased 22.9% to $768.7 million and exceeded the consensus mark of $747 million. Gross profit in the segment was $136 million, rising 32.4% from the year-earlier quarter’s figure and beating the consensus mark of $80 million.

The Commercial Vehicles Australia/Power Systems segment’s revenues in the reported quarter decreased 14% to $140.9 million and lagged the consensus mark of $166 million. Gross profit came in at $41 million, rising 3.4% from the 2021 level but missing the Zacks Consensus Estimate of $43.42 million.

Financial Tidbits

In the quarter under review, SG&A costs totaled $817.7 million, flaring up 9.1% year over year. Penske had cash and cash equivalents of $154.9 million as of Jun 30, 2022, up from $100.7 million in 2021 end. The long-term debt amounted to $1,407.5 million, up from $1,392 million as of Dec 31, 2021.

In the reported quarter, PAG repurchased 1.7 million shares of common stock for $173.4 million. PAG also increased share repurchase authorization by $250 million.  As of Jul 26, 2022, $330.6 million remained available for repurchase under its existing share repurchase authorization.

Zacks Rank & Key Picks

PAG carries a Zacks Rank #3 (Hold), currently.

Better-ranked players in the auto space include American Axle & Manufacturing Holdings (AXL - Free Report) , LCI Industries (LCII - Free Report) and Standard Motor Products (SMP - Free Report) , each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

American Axle has an expected earnings growth rate of 80.7% for 2023. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.

American Axle’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters. AXL pulled off a trailing four-quarter earnings surprise of 847.92%, on average. The stock has declined 10.7% over the past year.

LCI Industries has an expected earnings growth rate of 65.9% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.

LCI Industries’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. LCII pulled off a trailing four-quarter earnings surprise of 21.81%, on average. The stock has declined 13.5% in the past year.

Standard Motor has an expected earnings growth rate of 5.2% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.

Standard Motor’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. SMP pulled off a trailing four-quarter earnings surprise of 40.34%, on average. The stock has risen 7.8% over the past year.