Will Penske Automotive (PAG) Surprise this Earnings? - Analyst Blog


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Penske Automotive Group, Inc. ( PAG ) is set to report second-quarter 2014 results on Jul 30, 2014. Last quarter, it posted an earnings surprise of +1.39%. Let's see how things are shaping up for this announcement.

Earnings Whispers?

Our proven model does not conclusively show that Penske Automotive is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 87 cents.

Zacks Rank: Penske Automotive's Zacks Rank #2 (Buy) increases the predictive power of ESP.  However, when combined with a 0.00% ESP, it makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into an earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Factors to Consider this Quarter

Penske Automotive is poised to benefit from increasing dealerships, rising new vehicle sales and a strong financial position. Recently, the company completed the acquisition of BMW of Greenwich dealership in Greenwich, CT, which is expected to boost the company's annual revenues by $190 million. Moreover, Penske Automotive is focused on enhancing shareholders value by increasing dividend payouts. The board announced a 5.3% increase in dividends to 20 cents per share.

However, Penske Automotive has an extensive merchandise inventory. As of Mar 31, 2014, the company's inventory comprised 74.1% of current assets.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Meritor, Inc. ( MTOR ) has an earnings ESP of +26.67% and a Zacks Rank #2 (Buy). The company will be reporting second-quarter earnings on Jul 31, 2014.

BorgWarner Inc. ( BWA ), with an earnings ESP of +1.15% and a Zacks Rank #2, will be reporting second-quarter earnings on Jul 31, 2014.

American Axle & Manufacturing Holdings Inc. ( AXL ) has an earnings ESP of +8.45% and a Zacks Rank #2. The company will release its second-quarter financial results on Aug 1, 2014.

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BORG WARNER INC (BWA): Free Stock Analysis Report

PENSKE AUTO GRP (PAG): Free Stock Analysis Report

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MERITOR INC (MTOR): 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 , Earnings , Stocks
Referenced Stocks: BWA , PAG , AXL , MTOR

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