Penske Exceeds Estimates - Analyst Blog


Penske Automotive Group Inc. ( PAG ) posted a 23.7% increase in profit to 47 cents per share in the fourth quarter of 2011 from 38 cents per share in the corresponding quarter of the previous year. With this, the company has beaten the Zacks Consensus Estimate by 7 cents per share. In absolute terms, profits increased 21% to $43.0 million from $35.4 million in the fourth quarter of 2010.

The higher profit was attributable to strong performance of the company's used vehicle business and the positive impact from its premium/luxury brand mix in both the U.S. and international markets.

Total revenue went up 10.8%, to $3.0 billion, mainly driven by a 10.6% increase in retail unit sales to 71,453 vehicles. Same store retail units rose 6.6% to 68,551 vehicles and same store retail revenues scaled up 5.9% to $2.6 million during the quarter.

Total gross profit for the company rose 9.3% to $455.8 million and operating income increased 16.1% to $76.6 million.

New Vehicle revenues went up 8.5% to $1.5 billion on a 4% rise in sales to 39,270 units. Used Vehicle revenues appreciated 18.4% to $837.9 million based on a 20% increase in sales to 32,183 units. Revenues in the Service and Parts segment rose 5.4% to $349.2 million.

Meanwhile, revenues in the Fleet and Wholesale Vehicle segment increased 7.3% to $178.8 million and in the Finance and Insurance segment rose 14.8% to $68.9 million.

For full year 2011, Penske reported a 34.3% increase in profits to $1.80 per share (excluding tax-related adjustments) compared with the prior year. Total revenue scaled up 11.9% to $11.6 billion.

Penske had cash and cash equivalents of $29.1 million as of December 31, 2011, an improvement from $19.7 million in the corresponding period of the prior year. Long-term debt amounted to $850.2 million as of December 31, 2011, up from $779.9 million as of December 31, 2010. Consequently, long-term debt to capitalization ratio remained stable at 42.7% compared with the prior year.

In 2011, Penske repurchased 2,449,768 shares of its common stock for $44.3 million, reflecting an average price of $18.07. The company currently has remaining authorized shares worth up to $106.8 million to repurchase out of its outstanding common stock, debt or convertible debt.

Penske's product mix, which includes a wide range of imported and luxury brands, helps it to maintain a strong foothold in both the U.S. and overseas markets, including Europe. It competes with AutoNation Inc. ( AN ) and Group 1 Automotive, Inc. ( GPI ). The company currently has a Zacks #1 Rank, which translates to a recommendation of "Strong Buy" for the short term (1 to 3 months).

AUTONATION INC ( AN ): Free Stock Analysis Report
GROUP 1 AUTO ( GPI ): Free Stock Analysis Report
PENSKE AUTO GRP ( PAG ): 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 The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AN , GPI , PAG

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