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Penske Automotive Group Inc. (PAG - Free Report) recorded adjusted earnings of $1.27 per share in the second quarter of 2017, surpassing the Zacks Consensus Estimate of $1.20. Earnings per share at $1.23, inclusive of the impact of foreign exchange, posted the highest figure in the company’s history.  

Net income rallied 12.5% to $106.9 million in the quarter from $95 million a year ago.

Revenues rose 2.5% year over year to $5.38 billion, thereby beating the Zacks Consensus Estimate of $5.33 billion. Excluding foreign exchange, revenues increased 6.6%, driven by the 4.2% rise in total retail automotive sales to 130,127 units. Same-store retail revenues declined 5.6% to 112,796 units.

Gross profit inched up 1.9% to $817.3 million from $771.3 million in second-quarter 2016. Operating income grew 4.8% to $172 million from $164.1 million in the year-ago quarter.

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

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 nudged up to $5.1 billion from the year-ago figure of $4.8 billion.

Revenues from Retail Commercial Trucks decreased to $228.5 million from $309.5 million recorded in the year-ago quarter.

Revenues from Commercial Vehicles Australia/Power Systems and Other increased to $114.2 million from $107.8 million in the year-ago quarter.

Financial Position

Penske Automotive had cash and cash equivalents of $20.7 million as of Jun 30, 2017, down from $24 million as of Dec 31, 2016. Long-term debt was $2 billion as of June 30, 2017, up from $1.8 billion as of Dec 31, 2016.


On Jul 26, the company’s board members approved of a dividend of 32 cents per common share, payable on Sep 1, to shareholders of record on Aug 10.

Price Performance

Penske Automotive shares have lost 6.3% in the last three months, significantly underperforming the 1.1% decline of the industry it belongs to.

Zacks Rank & Key Picks

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

Some better-ranked companies in the auto space are Allison Transmission Holdings (ALSN - Free Report) , Volkswagen AG (VLKAY - Free Report) and Daimler AG (DDAIF - Free Report) , all stocks sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has expected long-term growth rate of 11%.

Volkswagen has expected growth rate of around 17.3% over the long term.

Daimler has expected long-term growth rate of 2.8%.

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