It has been about a month since the last earnings report for Penske Automotive (PAG Quick QuotePAG - Free Report) . Shares have lost about 1% in that time frame, underperforming the S&P 500.

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

Penske Q2 Earnings Beat Expectations, Declines Y/Y

Penske reported second-quarter 2024 adjusted earnings of $3.61 per share, which decreased 18% year over year but surpassed the Zacks Consensus Estimate of $3.43. Better-than-expected results from Commercial Vehicle Distribution and Other segment drove the outperformance. The company registered net sales of $7.69 billion, surpassing the Zacks Consensus Estimate by 0.02%. The top line rose 3.1% from the year-ago quarter's level.

Penske’s gross profit in the reported quarter declined 0.7% on a year-over-year basis to $1.26 billion. The operating income contracted 11.2% to $338 million. Foreign currency transactions positively impacted revenues, net income and earnings per share (EPS) by $97.3 million, $1 million and one cent, respectively.

In the reported quarter, same-store retail units declined 1% year over year to 120,486. Within the Retail Automotive segment, same-store new-vehicle revenues were up 1.9% to $2.87 billion. Same-store used-vehicle revenues decreased 5.6% to $2.15 billion.

Segmental Performance

In the reported period, revenues in the Retail Automotive segment came in at $6.61 billion, up 3% from the year-ago quarter's level. Our estimate was for $6.63 billion. Total new and used vehicles delivered rose 2% year over year to 126,653 units. Gross profit of $1.07 billion fell 1% year over year and lagged our estimate of $1.08 billion.

Revenues in the Retail Commercial Truck segment decreased 3% to $892.3 million but outpaced our estimate of $876.3 million. Gross profit in the segment was $144.5 million, down from $146.8 million reported in the year-earlier quarter. Our expectation was $145 million.

The Commercial Vehicle Distribution and Other segment’s revenues in the reported quarter increased 32% to $189 million and crossed our estimate of $153.6 million. Gross profit came in at $44.6 million, which increased from $40.3 million reported in the year-ago period and beat our estimate of $41.6 million.

Financial Tidbits

In the quarter under review, SG&A costs totaled $887.5 million, up 3.4% year over year. As of Jun 30, 2024, Penske had cash and cash equivalents of $115 million, up from $96.4 million as of Dec 31, 2023. The long-term debt amounted to $1.59 billion, up from $1.42 billion as of Dec 31, 2023.

During the quarter under discussion, PAG repurchased 0.2 million shares of common stock for $25.2 million. As of Jun 30, 2024, $157.4 million of stock repurchase authorization remained outstanding.

Penske increased dividend by 11% to $1.07 per share, to be paid out on Sep 4, 2024, to shareholders of record as of Aug 15, 2024. This marked the 15^th consecutive quarterly increase in the payout.

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, Penske has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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