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Penske Automotive (PAG) Q1 Earnings in Line, Revenues Beat

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Penske Automotive Group, Inc. PAG recorded earnings of 97 cents per share in the first quarter of 2017, on par with the Zacks Consensus Estimate.

Net income rose 3.5% to $83 million in the quarter from $80.2 million a year ago. Income from continuing operations increased 4.2% from $79.3 million a year ago to $83.2 million.

Revenues rose 5.3% to $5.1 billion, surpassing the Zacks Consensus Estimate of $4.8 billion. Excluding foreign exchange, revenues increased 11.3%, driven by the 11.6% rise in total retail automotive sales to 124,472 units.The increase in automotive sales was driven by the strength in the company's U.K. operations and acquisitions. 

Same-store retail revenues declined 2.2% to $4.4 billion.

Gross profit increased 7% to $774.3 million from $723.8 million in first-quarter 2016. Operating income grew 4.2% to $150.2 million from $144.1 million in the year-ago quarter. 

Penske Automotive Group, Inc. Price, Consensus and EPS Surprise


Penske Automotive Group, Inc. Price, Consensus and EPS Surprise | Penske Automotive Group, Inc. Quote

Segment Performance

The company operates under three reportable segments – Retail Automotive, Retail Commercial Trucks and Commercial Vehicles Australia/Power Systems and Other.

Revenues from Retail Automotive inched up to $4.8 billion from the year-ago figure of $4.5 billion.

Revenues from Retail Commercial Trucks increased to $211.7 million from $206.7 million recorded in the year-ago quarter.

Revenues from Commercial Vehicles Australia/Power Systems and Other increased to $113 million from $103 million in the year-ago quarter.

Financial Position

Penske Automotive had cash and cash equivalents of $72.2 million as of Mar 31, 2017, up from $45.6 million as of Mar 31, 2016. Long-term debt was $2 billion as of March 31, 2017, up from $1.33 billion as of Mar 31, 2016.

Acquisition Update

During the last three months, the company completed acquisitions that are estimated to generate roughly $900 million in annualized revenue.

The acquisitions include Jaguar and Land Rover dealershipsin Paramus, NJ, U.S.-based CarSense and U.K.-based CarShop.

In Apr 2017, the company completed the acquisition of Schumacher European, Ltd., a Mercedes-Benz and Sprinter dealership with 67 service bays located in Phoenix, AZ. The acquisition is expected to add roughly $250 million in annualized revenue. 

Price Performance

In the last one year, Penske Automotive’s share price increased 23.6% while the Zacks categorized Retail/Wholesale Auto/Truck industry rallied 12.3%.

Zacks Rank & Key Picks

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

Better-ranked companies in the auto space include Lithia Motors Inc. LAD, BorgWarner Inc. BWA and Cummins Inc. (CMI - Free Report) each with a Zacks Rank #2 (Buy).

The expected long-term growth rate for Lithia, BorgWarner and Cummins is 12.81%, 8.60% and 9.84%, respectively.

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