Penske (PAG) Gains from Buyouts, Wide Dealership Network

On Feb 12, we issued an updated research report on the automotive and commercial truck dealership company, Penske Automotive Group, Inc. PAG.

In the fourth-quarter 2017, Penske Automotive witnessed a year-over-year increase in revenues and adjusted earnings. Moreover, both earnings and revenues surpassed the respective Zacks Consensus Estimate.

In January, the company completed acquiring The Car People, a used-vehicle seller based in the United Kingdom, which is expected to generate annualized revenues of roughly $300 million. Earlier in February 2017, Penske Automotive bought another used-vehicles retailer, CarShop.

These acquisitions will enable the company to develop its used-car business segment and reinforce its position in the United Kingdom, the company’s second-largest market. In fiscal 2017, its U.K. market contributed 33% in the total revenue, in comparison to 32% in the year-ago period.

Penske Automotive Group, Inc. Price and Consensus

Penske Automotive Group, Inc. Price and Consensus | Penske Automotive Group, Inc. Quote

Additionally, its expanding dealership network is boosting earnings. As of Dec 31, 2017, the company had operated 20 medium and heavy-duty truck dealership locations in the United States and Canada, having retailed 2,294 units and generated $308.2 million of revenues.

Also, in order to boost shareholder confidence in Penske Automotive, its management frequently engages in share repurchase programs and hikes its cash dividend payments. In 2017, the company repurchased 302,000 shares for $12.7 million. Further, in January, it hiked its dividend 3% to 34 cents for fourth-quarter fiscal 2017, which is to be paid on Mar 1, 2018. In fact, the company increased its quarterly cash dividends in each of the trailing four quarters from its preceding payouts.

Penske Automotive’s stock has seen the Zacks Consensus Estimate for quarterly earnings being revised 2.7% upward over the last seven days.

Price Performance

Penske Automotive’s stock has surged 5.8% in the last three months, substantially outperforming the 2% rally of the industry it belongs to.

Zacks Rank & Other Key Picks

Penske Automotive has a Zacks Rank #1 (Strong Buy). Other top-ranked stocks in the auto space include PACCAR Inc. PCAR, Genuine Parts Co. GPC and Lear Corp. LEA. PACCAR sports a Zacks Rank #1, while Genuine Parts and Lear carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PACCAR has an expected long-term growth rate of 10%. In the last six months, shares of the company have gained 4.7%.

Genuine Parts has an expected long-term growth rate of 7.2%. Shares of the company have rallied 16.7% in the last six months.

Lear Corp. has an expected long-term growth rate of 7.1%. In the last six months, shares of the company have jumped 30.8%.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report
 
PACCAR Inc. (PCAR) : Free Stock Analysis Report
 
Lear Corporation (LEA) : Free Stock Analysis Report
 
Genuine Parts Company (GPC) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research