Penske Automotive Group Inc.
) second-quarter 2014 earnings improved 27.1% to 89 cents from 70
cents reported in the year-ago quarter. The results also surpassed
the Zacks Consensus Estimate by 2 cents.
Penske Automotive Group, Inc - Earnings
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Net income from continuing operations rose 27.5% to $80.3
million in the quarter from $63 million a year ago. The improvement
was driven by favorable brand mix and geographical diversification
of the revenue base.
Revenues grew 21.4% year over year to $4.41 billion, surpassing the
Zacks Consensus Estimate of $4.25 billion. Same-store retail
revenues rose 12.7% to $3.9 billion. The year-over-year rise was
driven by a 10.4% increase in total retail sales to 101,422 units,
including a 5.3% increase in same-store retail sales to 96,658
units. Retail sales went up 8.4% in the U.S. and 15.3%
New Vehicle revenues escalated 18.2% to $2.24 billion on a 10.5%
rise in sales to 55,510 units. Used Vehicle revenues rose 19.9% to
$1.3 billion owing to a 10.4% increase in sales to 45,912 units.
Meanwhile, revenues in the Service and Parts segment improved 13.2%
to $435.7 million.
Revenues in the Fleet and Wholesale Vehicle segment increased 20.2%
to $216.8 million, while revenues from the Finance and Insurance
segment rose 18.6% to $112.3 million. Revenues from the Commercial
Vehicle, Car Rental and other segment amounted to $130.5 million in
the second quarter of 2014.
Gross profit improved 19.2% to $666.9 million from $559.5 million
in the second quarter of 2013. Operating income augmented 21.5% to
$136.2 million from $112.1 million a year ago.
Share Repurchase & Dividend
During the first half of 2014, Penske repurchased 335,350 shares
for $15.5 million, on an average price of $46.20 per share. The
remaining authorization available under the current repurchase
program was $77.6 million as of Jun 30, 2014.
Earlier this month, the company approved a 5.3% rise in cash
dividend to 20 cents per share for the second quarter of 2014. The
dividend will be paid on Sep 2, 2014, to shareholders of record as
of Aug 11. The share repurchases and increase in dividend reflects
the company's commitment to enhance shareholders return.
Penske had cash and cash equivalents of $61.4 million as of Jun 30,
2014, an increase from $49.8 million as of Dec 31, 2013. Long-term
debt stood at $1.08 billion as of Jun 30, 2014, in line with the
figure reported on Dec 31, 2013.
Penske is poised to benefit from increasing dealerships, rising
sales of new and used vehicles and a strong financial position.
However, we are concerned about intensifying competition, high
inventory levels and exposure to foreign exchange rate volatility.
Currently, the stock carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the auto sector include Rush
Enterprises, Inc. (
), Lithia Motors Inc. (
) and Asbury Automotive Group, Inc. (
). Rush Enterprises and Lithia Motors sport a Zacks Rank #1 (Strong
Buy) while Asbury Automotive is a Zacks Rank #2 (Buy) stock.
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PENSKE AUTO GRP (PAG): Free Stock Analysis
LITHIA MOTORS (LAD): Free Stock Analysis Report
ASBURY AUTO GRP (ABG): Free Stock Analysis
RUSH ENTRPRS-A (RUSHA): Free Stock Analysis
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