How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you'd invested in Penske Automotive (
PAG Quick Quote PAG - Free Report) ten years ago? It may not have been easy to hold on to PAG for all that time, but if you did, how much would your investment be worth today? Penske Automotive's Business In-Depth
With that in mind, let's take a look at Penske Automotive's main business drivers.
Established in 1990, Penske Automotive Group, Inc., based in Bloomfield Hills, MI, engages in the operation of automotive and commercial truck dealerships in the United States, Canada and Western Europe. The company also distributes commercial vehicles, diesel engines, gas engines, power systems and related parts and services principally in Australia and New Zealand. It employs more than 23,000 people across the globe.
The company also offers higher margin products such as finance, insurance and vehicle service contracts; maintenance repair services; replacement parts and aftermarket automotive products. Penske operates under three reportable segments, Retail Automotive, Commercial Truck and Commercial Vehicles Australia/Power Systems. Retail Automotive which deals with retail automotive dealership operations generated 88% of revenues in 2021. Commercial Truck, which consists of the U.S. retail commercial truck dealership operations generated 9.6% of the revenues in 2021. The company operates a heavy and medium-duty truck dealership group known as Premier Truck Group (PTG) with locations in Texas, Oklahoma, Tennessee, Georgia, and Canada. Commercial Vehicles Australia/Power Systems and Other generated 2.4% of the revenues in 2021. The company is the exclusive importer and distributor of Western Star heavy-duty trucks (a Daimler brand), MAN heavy and medium-duty trucks and buses (a VW Group brand), and Dennis Eagle refuse collection vehicles. In 2021, its retail automotive brand mix consisted of 71% Premium, 21% Volume non-U.S., 7% Car Shop Used-Vehicle Centers and 1% General Motors/Chrysler. Bottom Line
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Penske Automotive a decade ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in August 2012 would be worth $4,694.56, or a 369.46% gain, as of August 19, 2022, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
Compare this to the S&P 500's rally of 202.06% and gold's return of 4.59% over the same time frame.
Looking ahead, analysts are expecting more upside for PAG.
Penske is riding high on strategic acquisitions. It has become the largest dealership group for Freightliner in North America with Warner Truck Centers buyout. Buyouts of Kansas City Freightliner, McCoy and Team Trucks Centers are boosting Penske’s top line. Penske Transportation Solutions (PTS) joint venture and acquisition of Black Horse Carriers are driving sales. Expansion of digital capabilities, balance sheet strength and investor-friendly moves are other positives. However, Penske is bearing the brunt of rising SG&A expenses amid CarShop expansion, ramp up of e-commerce activities and introduction of new tools and technologies. Low Inventory levels in the new vehicle segment may induce lost revenues. Adverse forex translations and rife competition are other concerns. As such, investors are advised to wait for a better entry point.
Over the past four weeks, shares have rallied 11.73%, and there have been 5 higher earnings estimate revisions in the past two months for fiscal 2022 compared to none lower. The consensus estimate has moved up as well.