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Penske Automotive (PAG) Q3 Earnings Beat, Revenues Lag Estimates

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Penske Automotive Group, Inc. (PAG - Free Report) recorded adjusted earnings of $1.40 per share in third-quarter 2018, which surpassed the Zacks Consensus Estimate of $1.38. It recorded net earnings of $1.10 per share in the year-ago quarter. The company’s diversified portfolio enabled it to witness this rise.

Net income from continuing operations increased 38% year over year to $130.1 million in the reported quarter from $94.2 million a year ago.

Total revenues rose 2.4% year over year to $5.66 billion, which missed the Zacks Consensus Estimate of $5.86 billion. Same-store retail unit sales decreased 0.2% year over year to 123,799 units. Within the retail automotive segment, new-vehicle revenues declined 5.3% year over year to $2.4 billion while used-vehicle revenues gained 9.3% to $1.8 billion.

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

 

The company’s total gross profit increased 3.6% to $852.6 million from $822.6 million in the prior-year quarter. Operating income grew 7.7% to $163.9 million from $152.2 million.

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 $5.2 billion from the year-ago figure of $5.1 billion.

Revenues from Retail Commercial Trucks increased to $385.3 million from $300 million in the year-ago quarter.

In the reported quarter, revenues from Commercial Vehicles Australia/Power Systems and Other grew to $124.8 million from $139.4 million a year ago.

Financial Position

Penske Automotive had cash and cash equivalents of $37.6 million as of Sep 30, 2018, marking a decline from $45.7 million recorded as of Dec 31, 2017. Long-term debt was $2 billion at the end of the third quarter, which was almost in line with the year-ago figure.

Share Repurchase

During the nine months ended on Sep 30, 2018, Penske Automotive repurchased 1,252,624 shares for $55.8 million. At the end of third-quarter 2018, the company had roughly $150 million available under its existing share repurchase authorization.

Zacks Rank and Stocks to Consider

Penske Automotive currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are CarMax, Inc. (KMX - Free Report) , Allison Transmission Holdings, Inc. (ALSN - Free Report) and Advance Auto Parts, Inc. (AAP - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CarMax has an expected long-term growth rate of 3.3%. Over the past six months, shares of the company have moved up 12.4%.

Allison Transmission has an expected long-term growth rate of 10%. Over the past six months, shares of the company have moved up 12.8%.

Advance Auto has an expected long-term growth rate of 12.3%. Shares of the company have risen 40.3% over the past six months.

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