Penske Automotive Group Inc.
(
PAG
) recorded a 41% increase in profits to 55 cents per share in the
first quarter of 2012 from 39 cents in the previous year. The
profit surpassed the Zacks Consensus Estimate by 7 cents per
share.
In absolute terms, profits increased 37.6% to $50.2 million from
$36.5 million in the first quarter of 2011.
The higher profits were attributable to strong performance in
both the U.S. and international markets. Higher new and used
vehicle sales and improvement in service and part operations
boosted gross margin.
Total revenue rose 17.9%, to $3.2 billion, mainly driven by an
18.1% increase in retail unit sales to 81,472 vehicles and
improvement in the company's used-to-new vehicle ratio to 0.89 from
0.78.
Same store retail units increased 9.5% to 74,993 vehicles and
same store retail revenues scaled up 7.5% to $2.8 billion during
the quarter.
New Vehicle revenues advanced 13.9% to $1.6 billion on an 11.5%
rise in sales to 43,099 units. Used Vehicle revenues rose 22.5% to
$969.7 million based on a 26.6% increase in sales to 38,373 units.
Revenues in the Service and Parts segment increased 8.3% to $369.7
million, Finance and Insurance segment grew 20.2% to $79.9 million
and Fleet and Wholesale vehicle advanced 47.6% to $244.6 million in
the quarter.
Gross profit increased 15.3% to $506.6 million from $439.2
million in the year ago quarter. As a percentage of gross profit,
selling, general and administrative expenses declined to 78.7% from
80.9% in first quarter of 2011. The company reported operating
income of $94.6 million, which was 2.9% of revenues, depicting
improvement of 30 basis points.
Penske had cash and cash equivalents of $31.8 million as of
March 31, 2012, an improvement from $28.5 million in the
corresponding period of the prior year. Long-term debt amounted to
$848.6 million as of March 31, 2012, compared with $846.8 million
as of December 31, 2011.
In the quarter, the company repurchased 350,000 shares of its
common stock for $8.5 billion, reflecting an average price of
$24.35. Currently, the company has remaining authorized shares
worth up to $98.3 million for repurchase out of its outstanding
common stock, debt or convertible debt.
Penske Automotive Group operates with 335 retail automotive
franchises, providing 40 different brands and 29 collision repair
centers. The company sells new and previously owned vehicles along
with finance and insurance product. Apart from its franchises in US
and Europe, the company offers repair and maintenance services of
the brands it sells.
The company's product mix, including a wide range of imported
and luxury brands, helps it maintain a strong foothold in both US
and international markets. It competes with
Lithia Motors
(
LAD
) and
Sonic Automotive
(
SAH
). Currently, the company has a Zacks #2 Rank, which translates
into a rating of "Buy" for the short term (1 to 3 months).
LITHIA MOTORS (
LAD
): Free Stock Analysis Report
PENSKE AUTO GRP (
PAG
): Free Stock Analysis Report
SONIC AUTOMOTVE (
SAH
): Free Stock Analysis Report
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