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Penske Automotive to Grow on Buyouts, Dealership Expansion


On Jan 9, we issued an updated research report on Penske Automotive Group, Inc. PAG.

The company reported earnings per share of $1.10 for third-quarter fiscal 2017, beating the Zacks Consensus Estimate of $1.07. Quarterly revenues rose 7.2% year over year to $5.52 billion. The top line also surpassed the Zacks Consensus Estimate of $5.34 billion.

At the start of this month, Penske Automotive completed acquiring The Car People. The acquired company is a U.K.-based retailer of good quality used vehicles at fixed prices. The acquirer projects that this buyout will rake in annualized revenues of roughly $300 million.

Penske Automotive Group, Inc. Price and Consensus

Penske Automotive Group, Inc. Price and Consensus | Penske Automotive Group, Inc. Quote

Earlier in 2017, the company had in the initial months acquired another retailer of used vehicles in the U.K. called CarShop.

These acquisitions will help Penske Automotive reinforce its position in the United Kingdom, the company’s second largest market.

Prior to this, last January, the company had also acquired a specialty retailer of used vehicles in the United States known as CarSense.

All these acquisitions are likely to diversify Penske Automotive’s business and enable the company to capitalize on the highly fragmented used automotive retail segment.

The company is also poised to benefit from its expanding dealership networks. It has extended its retail commercial truck dealership business in Toronto, Canada and acquired six locations representing Freightliner and Western Star brands.

Penske Automotive focuses on capital deployment through regular quarterly dividends to shareholders. The last dividend raise was in October 2017 wherein the company’s board had approved a 3.1% hike in cash dividend per share to 33 cents.

Additionally, the stock has seen the Zacks Consensus Estimate for fiscal 2017 earnings being revised 0.23% upward over the last seven days. It also has a long-term growth rate of 6.5%.

Price Performance

Shares of Penske Automotive have gained 5.2% over a month, outperforming the 2.6% rise of the industry it belongs to.

Zacks Rank & Other Key Picks

Penske Automotive carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the auto space are Oshkosh Corporation OSK, Lear Corporation LEA and Gentex Corporation GNTX, all carrying the Zacks Rank of 2 as Penske Automotive. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Oshkosh has an expected long-term growth rate of 16.5%. In the last three months, shares of the company have increased 7.5%.

Lear has an expected long-term growth rate of 7.1%. In the last three months, shares of the company have climbed 9.5%.

Gentex has an expected long-term growth rate of 9.7%. In the last three months, shares of the company have jumped 8.3%.

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