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

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It has been about a month since the last earnings report for Penske Automotive Group, Inc. (PAG - Free Report) . Shares have added about 3.2% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is PAG 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 Automotive's Q1 Earnings & Sales Top Estimates

Penske Automotive recorded adjusted earnings of $1.25 per share, which surpassed the Zacks Consensus Estimate of $1.12. Including tax benefits, net earnings were $1.26 per share. The company recorded net earnings of 97 cents per share in the year-ago quarter.

Income from continuing operations jumped 28.8% year over year to $107.7 million in the reported quarter from $83.6 million a year ago.

Revenues rose 13.1% year over year to $5.7 billion, beating the Zacks Consensus Estimate of $5.2 billion. Same-store retail-unit sales jumped 0.4% year over year to 111,240 units and retail-unit sales went up 6.4% to 132,490.

While gross profit increased 11.6% to $864.4 million from $774.3 million in the prior-year quarter, operating income grew 17% to $175.7 million from $150.2 million.

Per the company, the recorded results were driven by outstanding performance across each area of its business, which demonstrates the strength of its diversified transportation services model.

Segmental Performance

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

Revenues from Retail Automotive rose to $5.3 billion from the year-ago figure of $4.8 billion.

Revenues from Retail Commercial Trucks increased to $292.4 million from $211.7 million in the year-ago quarter.

In the reported quarter, revenues from Commercial Vehicles Australia/Power Systems and Other grew to $158.5 million from $113 million a year ago.

Financial Position

Penske Automotive had cash and cash equivalents of $52.8 million as of Mar 31, 2018, down from $72.2 million as of Mar 31, 2017. Long-term debt was $2.1 billion at the end of the fiscal first quarter, up from $2 billion a year ago.

Share Repurchase

During the three months ended Mar 31, 2018, Penske Automotive repurchased 1,133,016 shares for $50 million at an average price of $44.13 per share. As of Mar 31, 2018, the company had outstanding share repurchase authorization of roughly $150 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. There have been two revisions higher for the current quarter.

VGM Scores

At this time, PAG has a strong Growth Score of A, though it is lagging a lot on the momentum front with a D. However, the stock was also 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.

Zacks style scores indicate that the company's stock is suitable for value and growth investors.

Outlook

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




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