Penske Automotive's third-quarter 2014 earnings improved 16.4% to
$0.85, at par with the Zacks Consensus Estimate. Revenues grew
17.5% year over year to $4.42 billion, beating the Zacks Consensus
Estimate of $4.38 billion. The year-over-year rise was driven by a
10.2% increase in total retail sales to 104,963 units, including a
5.3% increase in same-store retail sales to 100,250 units. Penske
Automotive is poised to benefit from increasing dealerships, rising
sales of new vehicles, a strong financial position and dividend
hike. It is also introducing initiatives to drive new market
penetration and improvements in used-vehicle remarketing. Thus, we
are maintaining our Outperform recommendation.
Penske Automotive Group, Inc., based in Bloomfield Hills, MI,
was established in 1990 and is the second largest automotive
retailer in the U.S. As of Sep 30, 2014, the company operated 177
franchises in the U.S. and 147 franchises outside the U.S.,
primarily in the U.K. Also, the company offers 35 different
Apart from selling new and used vehicles, Penske Automotive
offers higher-margin products, such as finance, insurance and
vehicle service contracts maintenance repair services replacement
parts and aftermarket automotive products. In the first nine months
of 2014, New Vehicle represented 50.5% of the total revenue, Used
Vehicle represented 29.3%, Service and Parts represented 10%, Fleet
and Wholesale Vehicle represented 4.8%, Finance & Insurance
represented 2.6%, and Commercial Vehicle and Car Rental represented
In the first nine months of 2014, Penske Automotive generated
61% of the total automotive dealership revenue in the U.S. and
Puerto Rico, and 39% outside the U.S. Also, 71% of automotive
dealership revenues have been generated from premium brands such as
Audi, BMW, Mercedes-Benz and Porsche.
The company does not have any cost advantage from New Vehicle
sales as it purchases directly from manufacturers and thus,
competes primarily with other franchised dealers in marketing
areas. For Used Vehicle sales, Penske Automotive competes with
other franchised dealers, independent used-vehicle dealers,
automobile rental agencies, online purchasing services, and private
Penske Automotive Group, Inc. (PAG): Read the Full
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