Penske Automotive Group Inc.
) 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.
AUTONATION INC (AN): Free Stock Analysis
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PENSKE AUTO GRP (PAG): Free Stock Analysis
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TOYOTA MOTOR CP (TM): Free Stock Analysis
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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
Toyota Motor Corporation
) 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
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.
Sonic Automotive Inc.
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.