Penske Automotive Group, Inc. (PAG - Free Report) recently suspended its quarterly cash dividend on the coronavirus scare. It is a constructive step to boost the firm’s cash position and preserve financial flexibility in the face of the rising global market uncertainty. The company forecasts that the dividend suspension will preserve about $34 million in cash in the second quarter of 2020. Penske previously paid quarterly dividend of 42 cents per share for the 35th consecutive quarter in March.
Further, the company has enforced a variety of measures, including a company-wide hiring freeze, substantial cost cuts, furloughing 57% of its worldwide workforce, postponement of $150 million in capex, and negotiated rent deferrals at different locations for up to 90 days, to counter the pandemic-led crisis.
Additionally, the executive and management compensation has been drastically slashed, including a 100% pay cut for the CEO and president during the crisis. The board of directors has also suspended cash compensation for the next six months.
Moreover, the coronavirus pandemic has affected businesses across all markets of Penske, with several dealership operations being suspended or significantly reduced.
Penske currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The pandemic has become a concern for other global auto biggies as well, including Tesla (TSLA - Free Report) , Honda Motor (HMC - Free Report) , Toyota Motor (TM - Free Report) , Volkswagen AG, Goodyear Tire, Nissan, Harley-Davidson and Hyundai Motor. Several automakers have closed their factories and suspended production, while the others plan to change manufacturing processes and cut production levels in their plants, in line with the nationwide campaign addressing the crisis. The pandemic has not only dented consumer sentiment and thwarted vehicle demand but also distorted the supply-chain balance globally.
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