Yahoo Finance Penske (PAG) Down 3.4% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Penske Automotive (PAG). Shares have lost about 3.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Penske due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Penske Q1 Earnings Miss Expectations, Declines Y/Y
Penske reported first-quarter 2024 adjusted earnings of $3.19 per share, which decreased 26% year over year and missed the Zacks Consensus Estimate of $3.35. The company registered net sales of $7.44 billion, which missed the Zacks Consensus Estimate of $7.45 billion. The top line, however, rose 1.5% from the year-ago quarter's level.
Penske’s gross profit in the reported quarter declined 0.6% on a year-over-year basis to $1.24 billion. The operating income contracted 12.3% to $327.6 million. Foreign currency transactions had positively impacted revenues, net income and earnings per share (EPS) by $98.1 million, $1.4 million and 2 cents, respectively.
In the reported quarter, same-store retail units declined 0.5% year over year to 113,532. Within the Retail Automotive segment, same-store new-vehicle revenues were down 1.1% to $2.69 billion. Same-store used-vehicle revenues decreased 1.4% to $2.24 billion.
Segmental Performance
In the reported period, revenues in the Retail Automotive segment came in at $6.48 billion, up 2.8% from the year-ago quarter's level. The figure also beat our estimate of $6.2 billion. The outperformance resulted from higher-than-expected revenues from new and used vehicles and service and parts. Gross profit of $1.06 billion fell 0.5% year over year but came ahead of our estimate of $974.7 million.
Revenues in the Retail Commercial Truck segment decreased 11.6% to $791.8 million and missed our estimate of $872.9 million. Gross profit in the segment was $144.8 million, down from $147 million reported in the year-earlier quarter. The figure, however, beat our expectation of $138.4 million.
The Commercial Vehicle Distribution and Other segment’s revenues in the reported quarter increased 24% to $178 million and beat our estimate of $148 million. Gross profit came in at $43.2 million, which increased from $42.7 million reported in the year-ago period and beat our estimate of $38.6 million.
Financial Tidbits
In the quarter under review, SG&A costs totaled $879.8 million, up 4.1% year over year. As of Mar 31, 2024, Penske had cash and cash equivalents of $116.9 million, up from $96.4 million as of Dec 31, 2023. The long-term debt amounted to $1.46 billion, up from $1.42 billion as of Dec 31, 2023.
During the quarter under discussion, PAG repurchased 0.2 million shares of common stock for $32.9 million. As of Mar 31, 2024, $182.6 million of stock repurchase authorization remained outstanding.
Penske increased dividend by 10% to 96 cents per share, to be paid out on Jun 4, 2024, to shareholders of record as of May 20, 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Penske has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Penske has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Penske is part of the Zacks Automotive - Retail and Whole Sales industry. Over the past month, Asbury Automotive Group (ABG), a stock from the same industry, has gained 8%. The company reported its results for the quarter ended March 2024 more than a month ago.
Asbury Automotive reported revenues of $4.2 billion in the last reported quarter, representing a year-over-year change of +17.3%. EPS of $7.21 for the same period compares with $8.37 a year ago.
For the current quarter, Asbury Automotive is expected to post earnings of $7.85 per share, indicating a change of -12.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.4% over the last 30 days.
Asbury Automotive has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report
Asbury Automotive Group, Inc. (ABG) : Free Stock Analysis Report
