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Penske (PAG) Up 3.2% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Penske Automotive (PAG - Free Report) . Shares have added about 3.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Penske due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Penske Beats Q1 Earnings Estimates

Penske reported first-quarter 2023 adjusted earnings of $4.31 per share, which decreased 9% year over year but surpassed the Zacks Consensus Estimate of $4.03. Higher-than-expected gross profit in the Retail Automotive, Retail Commercial Truck and Commercial Vehicle Distribution and Other segments resulted in this outperformance. This marked the 12th consecutive earnings beat for the company.

The auto retailer registered net sales of $7,339 million, which topped the Zacks Consensus Estimate of $6,833 million. The top line rose 5.3% from the year-ago quarter.

Penske’s gross profit in the reported quarter increased 1.7% on a year-over-year basis to $1,252.3 million. The operating income went down 7.1% to $373.5 million. In the reported quarter, same-store retail units rose 4.8% year over year to 117,619. Within the Retail Automotive segment, same-store new-vehicle revenues were up 8.7% to $2,646.8 million. Same-store used-vehicle revenues fell 7.2% to $2,216.3 million.

Segmental Performance

In the reported period, revenues in the Retail Automotive segment came in at $6,299.8 million, increasing 4% from a year ago and topping the consensus mark of $5,646 million. Gross profit of $1,062.6 inched up 1% year over year came and came ahead of the consensus mark of $946 million.

Revenues in the Retail Commercial Truck segment increased 13% to $895.6 million but fell short of the consensus mark of $870 million. Gross profit in the segment was $147 million, rising from $141.2 million in the year-earlier quarter figure and topping the consensus mark of $123 million.

The Commercial Vehicle Distribution and Other segment’s revenues in the reported quarter decreased 6.6% to $143.6 million and lagged the consensus mark of $160 million. Gross profit came in at $42.7 million, up from $39.8 million in the year-ago period and higher than the Zacks Consensus Estimate of $36.46 million.

Financial Tidbits

In the quarter under review, SG&A costs totaled $844.9 million, up 5.9% year over year. Penske had cash and cash equivalents of $100.6 million as of Mar 31, 2023. The long-term debt amounted to $1,619.8 million, up from $1,546.9 million as of Mar 31, 2023. During the quarter under discussion, PAG repurchased 0.9 million shares of common stock for $110.2 million. In February, the company boosted its buyback program by an additional $250 million. As of Mar 31, 2023, $214.1 million of stock repurchase authorization remained outstanding.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

At this time, Penske has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Penske has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Penske belongs to the Zacks Automotive - Retail and Whole Sales industry. Another stock from the same industry, Asbury Automotive Group (ABG - Free Report) , has gained 4.1% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.

Asbury Automotive reported revenues of $3.58 billion in the last reported quarter, representing a year-over-year change of -8.4%. EPS of $8.37 for the same period compares with $9.27 a year ago.

For the current quarter, Asbury Automotive is expected to post earnings of $7.88 per share, indicating a change of -21.5% from the year-ago quarter. The Zacks Consensus Estimate has changed +5.4% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Asbury Automotive. Also, the stock has a VGM Score of A.

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