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Penske (PAG) Surpasses Q4 Earnings and Sales Estimates

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Penske Automotive Group (PAG - Free Report) reported fourth-quarter 2022 adjusted earnings of $4.21 per share, which increased from $4.10 and surpassed the Zacks Consensus Estimate of $4.03. Higher-than-expected revenues in the Retail Automotive and Retail Commercial Truck segments resulted in this outperformance. The auto retailer registered net sales of $7,012 million, which topped the Zacks Consensus Estimate of $6,378 million. The top line rose 11.4% from the year-ago quarter.

Penske’s gross profit in the reported quarter increased 0.3% on a year-over-year basis to $1,183.2 million. The operating income went down 5.8% to $335.5 million.

In the reported quarter, same-store retail units rose 2.3% year over year to 102,906. Within the Retail Automotive segment, same-store new-vehicle revenues were up 12.7% to $2,618.8 million, and same-store used-vehicle revenues fell 8.5% to $1,909.2 million.

Segmental Performance

In the reported period, revenues in the Retail Automotive segment came in at $5,910.4 million, increasing 8% from a year ago and topping the consensus mark of $5,384 million. Gross profit of $1,008.8 million declined from $1019 million recorded in 2022.

Revenues in the Retail Commercial Truck segment increased 39.6% to $960.8 million and exceeded the consensus mark of $826 million. Gross profit in the segment was $138.2 million, rising 16.2% from the year-earlier quarter’s figure.

The Commercial Vehicle Distribution and Other segment’s revenues in the reported quarter increased 5% to $140.6 million and lagged the consensus mark of $143 million. Gross profit came in at $36.2 million, declining from $41.3 million in the year-ago period.

Financial Tidbits

In the quarter under review, SG&A costs totaled $815.5 million, up 3.1% year over year. Penske had cash and cash equivalents of $106.5 million as of Dec 31, 2022, up from $100.7 million in 2021 end. The long-term debt amounted to $1,546.9 million, up from $1,392 million as of Dec 31, 2021. In 2022, PAG repurchased 8.2 million shares of common stock for $886.5 million. The company also hiked its payout by 7% to 61 cents a share.

Zacks Rank & Key Picks

Penske currently carries a Zacks Rank #3 (Hold).

A few top-ranked players in the auto space include Mercedes-Benz Group AG (MBGAF - Free Report) , Wabash National (WNC - Free Report) and Modine Manufacturing (MOD - Free Report) , all sporting a Zacks Rank #1 (Strong Buy).

Mercedes-Benz develops, manufactures and sells passenger cars, including premium and luxury vehicles. The Zacks Consensus Estimate for MBGAF’s 2023 sales implies year-over-year growth of 3.57%.

Wabash is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimate for WNC’s 2023 sales and earnings implies year-over-year growth of 13.06% and 24%, respectively.

Modine operates primarily in a single industry consisting of the manufacture and sale of heat transfer equipment. The Zacks Consensus Estimate for MOD’s 2023 sales and earnings implies year-over-year growth of 11.43% and 43.09%, respectively.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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