Penske Automotive Group Inc. (PAG - Free Report) has announced the acquisition of two dealerships, namely Jon Lancaster Toyota Scion and Lexus in Madison, Wisconsin. The company expects that the acquisitions will contribute around $130 million to its revenues annually.
The acquisitions will expand the company’s footprint in Madison and is consistent with its expansion strategy in the upper Midwest. The company will also seize growth opportunities from the existing dealerships of BMW and MINI in Minneapolis along with the Toyota Motor Corporation (TM - Free Report) and Lexus dealerships.
The Toyota dealership is based in east Madison and is spread across ten acres of land, with 70,000 square feet of land allotted for sales and service of vehicles. The dealership also includes a service centre, which specializes in oil changes and brake repairs.
The Lexus dealership is based in west Madison, and is spread across nine acres of land, with 45,000 square feet of the facility dedicated toward sales and service.
Penske reported a 20% growth in adjusted earnings per share to 60 cents in the third quarter of 2012 from 50 cents per share in the corresponding quarter last year. The results surpassed the Zacks Consensus Estimate by 3 cents. Profit went up 19.1% to $54.3 million from $45.6 million in the year-ago quarter.
Revenues in the quarter rose 17.4% year over year to $3.40 billion, beating the Zacks Consensus Estimate of $3.26 billion. The year over year growth was attributable to a 23.6% increase in retail sales to 88,151 units.
Penske Automotive Group sells new and previously owned vehicles along with finance and insurance products. It operates 341 retail automotive franchises, offering 40 different brands and 30 collision repair centers. It competes with Lithia Motors Inc. (LAD - Free Report) , AutoNation Inc. (AN - Free Report) and Sonic Automotive Inc. (SAH - Free Report) .
Currently, the company has a short term (1 to 3 months) Zacks #3 Rank (Hold). We have a long-term (more than 6 months) Neutral recommendation on its shares.