Penske Closes $550M Notes Offering - Analyst Blog

By Zacks Equity Research,

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Penske Automotive Group Inc. ( PAG ), on August 28, reported the completion of the previously announced offering of $550 million of 5.75% senior subordinated notes due 2022. The offering was made to qualified institutional buyers in the U.S. with respect to Rule 144A. Outside U.S., the offerings were made in accordance with Regulation S of the Securities Act of 1933.

The company will utilize the proceeds of the offering for the purchase of all the $375 million of 7.75% senior subordinated notes due 2016 and for the payment of fees and expenses related to the offering. The remaining amount will be utilized in the repayments of the company's current dues under the U.S. credit agreement and settlement of its U.S. floor plan borrowings.

Penske, in the second quarter of 2012, witnessed a 31% rise in adjusted earnings per share to 55 cents from 42 cents per share in the corresponding quarter last year. The results surpassed the Zacks Consensus Estimate by a penny. Profit escalated 26.4% to $49.5 million from $39.2 million in the year-ago quarter.

Revenues increased 19.2% to $3.4 billion, surpassing the Zacks Consensus Estimate of 3.3 billion. The growth was attributable to a 20.9% increase in retail sales volume, a 24.8% surge in new vehicle and a 16.4% hike in used vehicle unit sales.

Penske Automotive Group sells new and previously owned vehicles along with finance and insurance products. It operates 340 retail automotive franchises, providing 41 different brands and 30 collision repair centers. Apart from its franchises in U.S. and Europe, the company offers repair and maintenance services to 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 the U.S. and international markets. It competes with Lithia Motors ( LAD ) and Sonic Automotive ( SAH ). Currently, Penske has a Zacks #3 Rank, which translates into a short term (1 to 3 months) Hold rating.

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: LAD , PAG , SAH

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