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Can Penske (PAG) Please Investors This Earnings Season?
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Penske Automotive (PAG - Free Report) is slated to release fourth-quarter 2022 results on Feb 8, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share and revenues is pegged at $4.03 and $6.38 billion, respectively.
The auto retailer came up with better-than-anticipated results in the last reported quarter on higher-than-expected gross profit in the Retail Automotive and Retail Commercial Truck segments. Over the preceding four quarters, the company topped estimates on all occasions, with the average being 12.8%. This is depicted in the graph below:
Penske Automotive Group, Inc. Price and EPS Surprise
The Zacks Consensus Estimate for Penske’s fourth-quarter earnings per share has remained stable over the past 60 days. The bottom-line projection implies a year-on-year decline of 1.71%. The Zacks Consensus Estimate for quarterly revenues suggests a year-over-year increase of 1.29%.
Factors at Play
While Penske’s strategic acquisitions and e-commerce ramp up are likely to boost fourth-quarter results, low inventory levels, particularly in the new vehicle segment, are expected to have resulted in lost sales. Despite economic concerns, demand for cars has shown resilience but supply chain disruptions and shortage of components put a lid on inventory levels. However, rising prices of new vehicles are likely to have offset the tight inventory. Per the Kelly Blue Book, the average selling price of new vehicles hit a record high of $49,507, up 5% year over year as well as higher than $48,681 in November 2022. But while new vehicle prices are on the rise, falling used vehicle prices are set to have hurt the margins of Penske in the to-be-reported quarter.
Additionally, Penske has been bearing the brunt of rising selling, general and administrative (SG&A) expenses amid CarShop expansion, the ramp-up of e-commerce activities and the introduction of new tools and technologies. In the last reported quarter, SG&A flared up more than 4% year over year. The trend of escalating SG&A costs is expected to have dented margins.
Here's a peek into the key predictions for revenues across Penske’s segments.
The Zacks Consensus Estimate for the to-be-reported quarter’s revenues from the Retail Automotive segment — which accounts for the bulk of Penske’s overall top line — is pegged at $5,384 million, indicating contraction from $5,474 million recorded in the year-ago quarter.
For the December-end quarter, the consensus mark for revenues in the Retail Commercial Truck segment stands at $826 million, suggesting growth of $688 million from the year-ago level.
The consensus mark for revenues in the Commercial Vehicles Australia/Power Systems and Other for fourth-quarter 2022 is pegged at $143 million, implying an increase from $134 million recorded in the fourth quarter of 2021.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Penske this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here.
Earnings ESP: Penske has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
While an earnings beat is uncertain for Penske, here are a few stocks in the auto space, which, according to our model, have the right combination of elements to post an earnings beat.
Adient plc (ADNT - Free Report) will release fiscal first-quarter 2023 results on Feb 7. The company has an Earnings ESP of +6.61% and a Zacks Rank #3.
The Zacks Consensus Estimate for Adient’s to-be-reported quarter’s earnings and revenues is pegged at 40 cents per share and $3.72 billion, respectively. ADNT surpassed earnings estimates in two of the trailing four quarters, with the average negative surprise being 205.3%.
Allison Transmission (ALSN - Free Report) will release fourth-quarter 2022 results on Feb 15. The company has an Earnings ESP of +3.06% and a Zacks Rank #3.
The Zacks Consensus Estimate for Allison’s to-be-reported quarter’s earnings and revenues is pegged at $1.21 per share and $676 million, respectively. ALSN surpassed earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 10.3%.
Lucid Group (LCID - Free Report) will release fourth-quarter 2022 results on Feb 22. The company has an Earnings ESP of +3.90% and a Zacks Rank #2.
The Zacks Consensus Estimate for Lucid’s to-be-reported quarter’s loss per share and revenues is pegged at 39 cents per share and $290 million, respectively. LCID surpassed earnings estimates in two of the trailing four quarters for as many misses, with the average surprise being 11.2%.
Image: Bigstock
Can Penske (PAG) Please Investors This Earnings Season?
Penske Automotive (PAG - Free Report) is slated to release fourth-quarter 2022 results on Feb 8, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share and revenues is pegged at $4.03 and $6.38 billion, respectively.
The auto retailer came up with better-than-anticipated results in the last reported quarter on higher-than-expected gross profit in the Retail Automotive and Retail Commercial Truck segments. Over the preceding four quarters, the company topped estimates on all occasions, with the average being 12.8%. This is depicted in the graph below:
Penske Automotive Group, Inc. Price and EPS Surprise
Penske Automotive Group, Inc. price-eps-surprise | Penske Automotive Group, Inc. Quote
Trend in Estimate Revisions
The Zacks Consensus Estimate for Penske’s fourth-quarter earnings per share has remained stable over the past 60 days. The bottom-line projection implies a year-on-year decline of 1.71%. The Zacks Consensus Estimate for quarterly revenues suggests a year-over-year increase of 1.29%.
Factors at Play
While Penske’s strategic acquisitions and e-commerce ramp up are likely to boost fourth-quarter results, low inventory levels, particularly in the new vehicle segment, are expected to have resulted in lost sales. Despite economic concerns, demand for cars has shown resilience but supply chain disruptions and shortage of components put a lid on inventory levels. However, rising prices of new vehicles are likely to have offset the tight inventory. Per the Kelly Blue Book, the average selling price of new vehicles hit a record high of $49,507, up 5% year over year as well as higher than $48,681 in November 2022. But while new vehicle prices are on the rise, falling used vehicle prices are set to have hurt the margins of Penske in the to-be-reported quarter.
Additionally, Penske has been bearing the brunt of rising selling, general and administrative (SG&A) expenses amid CarShop expansion, the ramp-up of e-commerce activities and the introduction of new tools and technologies. In the last reported quarter, SG&A flared up more than 4% year over year. The trend of escalating SG&A costs is expected to have dented margins.
Here's a peek into the key predictions for revenues across Penske’s segments.
The Zacks Consensus Estimate for the to-be-reported quarter’s revenues from the Retail Automotive segment — which accounts for the bulk of Penske’s overall top line — is pegged at $5,384 million, indicating contraction from $5,474 million recorded in the year-ago quarter.
For the December-end quarter, the consensus mark for revenues in the Retail Commercial Truck segment stands at $826 million, suggesting growth of $688 million from the year-ago level.
The consensus mark for revenues in the Commercial Vehicles Australia/Power Systems and Other for fourth-quarter 2022 is pegged at $143 million, implying an increase from $134 million recorded in the fourth quarter of 2021.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Penske this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here.
Earnings ESP: Penske has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Penske currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With the Favorable Combination
While an earnings beat is uncertain for Penske, here are a few stocks in the auto space, which, according to our model, have the right combination of elements to post an earnings beat.
Adient plc (ADNT - Free Report) will release fiscal first-quarter 2023 results on Feb 7. The company has an Earnings ESP of +6.61% and a Zacks Rank #3.
The Zacks Consensus Estimate for Adient’s to-be-reported quarter’s earnings and revenues is pegged at 40 cents per share and $3.72 billion, respectively. ADNT surpassed earnings estimates in two of the trailing four quarters, with the average negative surprise being 205.3%.
Allison Transmission (ALSN - Free Report) will release fourth-quarter 2022 results on Feb 15. The company has an Earnings ESP of +3.06% and a Zacks Rank #3.
The Zacks Consensus Estimate for Allison’s to-be-reported quarter’s earnings and revenues is pegged at $1.21 per share and $676 million, respectively. ALSN surpassed earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 10.3%.
Lucid Group (LCID - Free Report) will release fourth-quarter 2022 results on Feb 22. The company has an Earnings ESP of +3.90% and a Zacks Rank #2.
The Zacks Consensus Estimate for Lucid’s to-be-reported quarter’s loss per share and revenues is pegged at 39 cents per share and $290 million, respectively. LCID surpassed earnings estimates in two of the trailing four quarters for as many misses, with the average surprise being 11.2%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.