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Penske Automotive Group (PAG)
NYSE:PAG
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Penske Automotive Group
(NYSE:PAG)
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Rating:71Outperform
Price Target:
$182.00
▲(15.54% Upside)
Action:ReiteratedDate:12/09/25
Penske Automotive Group's strong financial performance, highlighted by robust revenue growth and improved profitability, is the most significant factor driving its stock score. The recent dealership acquisition further strengthens its market position. However, technical indicators suggest caution due to potential overbought conditions, and challenges highlighted in the earnings call, such as cyber incidents and declining truck sales, present risks.
Positive Factors
Strategic Expansion
This acquisition is expected to add $1.5 billion in annualized revenue, enhancing market presence and strengthening relationships with Toyota and Lexus.
Revenue Growth
Consistent revenue growth demonstrates robust sales performance and market expansion, supporting long-term profitability.
Cash Flow Generation
Strong cash flow generation supports financial stability and provides flexibility for strategic investments and debt reduction.
Negative Factors
Challenges in UK Retail Automotive
Cyber incidents can disrupt operations and erode customer trust, potentially impacting long-term revenue and profitability in affected regions.
Decline in Commercial Truck Sales
A decline in commercial truck sales indicates vulnerability to freight market conditions, affecting revenue and profitability in this segment.
Increased SG&A Costs in the UK
Rising SG&A costs can pressure margins and reduce profitability, challenging cost management and operational efficiency.
Penske Automotive Group (PAG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$10.66B
Dividend Yield3.14%
Average Volume (3M)278.76K
Price to Earnings (P/E)11.5
Beta (1Y)0.67
Revenue Growth2.25%
EPS Growth8.92%
CountryUS
Employees28,700
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Dealerships
Share Statistics
EPS (TTM)2.91
Shares Outstanding65,858,550
10 Day Avg. Volume320,549
30 Day Avg. Volume278,761
Financial Highlights & Ratios
PEG Ratio4.17
Price to Book (P/B)1.88
Price to Sales (P/S)0.33
P/FCF Ratio16.11
Enterprise Value/Market Cap1.79
Enterprise Value/Revenue0.62
Enterprise Value/Gross Profit3.76
Enterprise Value/Ebitda11.82
Forecast
1Y Price Target
$187.00Price Target Upside18.72% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
EPS Forecast (FY)13.65
Revenue Forecast (FY)$31.62B
Penske Automotive Group Business Overview & Revenue Model
Company DescriptionPenske Automotive Group, Inc., a diversified transportation services company, operates automotive and commercial truck dealerships. The company operates through four segments: Retail Automotive, Retail Commercial Truck, Other, and Non-Automotive Investments. It operates dealerships under franchise agreements with various automotive manufacturers and distributors. The company engages in the sale of new and used motor vehicles, and related products and services comprise vehicle and collision repair services, as well as placement of finance and lease contracts, third-party insurance products, and other aftermarket products; and wholesale of parts. It also operates a heavy and medium duty truck dealership, which offers Freightliner and Western Star branded trucks, as well as a range of used trucks, and maintenance and repair services. In addition, it imports and distributes Western Star heavy-duty trucks, MAN heavy and medium duty trucks, buses, and Dennis Eagle refuse collection vehicles with associated parts in Australia, New Zealand, and portions of the Pacific. Further, the company distributes diesel and gas engines, and power systems. The company operates 320 retail automotive franchises, including 146 franchises located in the United States and 174 franchises located outside of the United States; 23 CarShop used vehicle dealerships in the United States and the United Kingdom; and 37 commercial truck dealerships in Texas, Oklahoma, Tennessee, Georgia, Utah, Idaho, Kansas, Missouri, and Oregon, as well as Canada. Penske Automotive Group, Inc. was incorporated in 1990 and is headquartered in Bloomfield Hills, Michigan.
How the Company Makes MoneyPenske Automotive Group generates revenue through multiple streams primarily focused on automotive retail. The main revenue sources include the sale of new and used vehicles, which accounts for a significant portion of its earnings. Additionally, the company earns money from service and parts sales, which provide ongoing revenue from vehicle maintenance and repairs. PAG also benefits from financing and insurance products provided to customers at the point of sale. The company has established partnerships with major automotive manufacturers, allowing it to offer a wide range of vehicles, which enhances its market presence. Furthermore, PAG's expansion into logistics and transportation services contributes to its overall revenue model, supporting its growth and profitability in a competitive market.
Penske Automotive Group Earnings Call Summary
Earnings Call Date:Feb 11, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Positive
The call describes a fundamentally profitable and capital-return-focused company with strong full-year results (revenue $31B, net income $935M, EPS $14.13), robust cash flow, active M&A and shareholder distributions. Management acknowledged meaningful near-term headwinds — weaker premium and BEV sales, supply/mix pressures in used vehicles, freight recession impacts on truck and PTS results, and U.K. market softness — and quantified one-time adverse items in Q4. Operational actions (fleet resizing, cost reductions, portfolio divestitures, acquisitions in higher-return markets) and early signs of improvement in PTS utilization and Australian performance position the company to benefit if macro and freight conditions normalize. On balance, the positives (strong full-year profitability, cash generation, disciplined capital allocation, strategic acquisitions and fleet/right-sizing actions) outweigh the near-term challenges called out for Q4 and Q1, supporting a constructive outlook.Q4-2025 Updates
Positive Updates
Strong Full-Year Financial Performance
Fiscal 2025 revenue of $31.0 billion; earnings before taxes of ~ $1.3 billion; net income of $935 million; diluted EPS of $14.13.
Q4 Profitability and Adjusted Results
Q4 revenue was $7.8 billion; EBT $256 million (adjusted EBT $263 million); Q4 net income $186 million (adjusted $192 million); Q4 EPS $2.83 (adjusted $2.91).
Cash Flow and Balance Sheet Strength
Operating cash flow of $1.0 billion for 2025; EBITDA of $1.5 billion; free cash flow of $651 million; liquidity of $1.6 billion and $65 million cash on hand; non-vehicle long-term debt $2.17 billion.
Capital Return and Shareholder Actions
21st consecutive quarterly dividend increase to $1.40 per share (payout ratio 37.4%, forward yield ~3.4%); repurchased 1.2 million shares (1.8%) for $182 million; ~$247.5 million remaining repurchase capacity; returned ~ $2.5 billion to shareholders over the last 4+ years.
Strategic M&A and Portfolio Optimization
Acquisitions completed including Penske Motor Group, Longo Toyota and Longo Lexus and other dealerships representing ~$1.6 billion of estimated annualized revenue; announced additional Toyota/Lexus and Ferrari acquisitions and two Lexus stores in Orlando expected to add ~$2.0 billion estimated annualized revenue; completed divestitures representing ~$700 million in revenue that generated $200 million proceeds and $4.5 million in EBT, with ~$140 million more expected from planned 2026 divestitures.
Commercial Truck and PTS Actions
Premier Truck Group outperformed the market in Class 8 retail (retail new/used trucks 3,789; revenue $725 million; gross profit $121 million); PTS sold 9,750 units in Q4 (41,500 in 2025), reduced fleet to ~397,000 from 435,000, and achieved equity earnings of $48 million (down <10%) while executing cost and fleet right-sizing measures; January rental utilization improved to 82%.
Regional Strengths — Australia and Select Markets
Australia delivered a very strong Q4 with EBT nearly doubling YoY; completed ~ $700 million of projects in 2025 and secured ~$500 million of orders for 2026 in off-highway/energy solutions; Energy Solutions business targeted to reach at least $1 billion revenue by 2030.
Operational Metrics — Gross Profit per Unit and Fixed Ops
Automotive Q4 retail gross profit per unit $4,689 (up $47 sequentially); used vehicle gross profit per unit $1,770 (flat YoY); U.S. same-store service & parts revenue up 6% and related gross profit up 5.5%; technician productivity ~ $30,000 gross profit per month and technician count up 2% YoY.
Capital Management and Cost Trends
Repaid $550 million of senior subordinated notes; invested $325 million in CapEx; total SG&A rose 2.1% (in line with inflation) and adjusted SG&A to gross profit ~71.5%; interest expense declined $18.8 million (7%).
Negative Updates
Q4 Revenue and Unit Declines
Q4 revenue declined 4% YoY to $7.8 billion; automotive same-store units delivered declined 8% and same-store used units declined 4%.
Premium Brand and BEV Sales Weakness
New sales of German luxury brands down ~20% in the U.S. and ~22% in the U.K.; Land Rover new sales down 37% (six-week production halt); BEV sales declined 63% in Q4 (≈1,700 fewer BEV units YoY), partly due to tariff- and BEV-credit related pull-forward into prior periods.
Commercial Truck and Freight Recession Impact
Prolonged freight weakness reduced Premier Truck Group EBT by $11 million (from $45M to $34M YoY); PTS operating revenue declined 5% to $2.6 billion in Q4; rental revenue down 17% and logistics down 3%.
Gain on Sale and PTS Earnings Pressure
Gain on sale declined by $18 million in Q4 and by $87 million for the full year 2025, materially reducing PTS profitability versus prior year.
U.K. Market Challenges and Restructuring
U.K. impacted by inflation, higher taxes, affordability pressures and electrification policy; same-store used units in U.K. decreased ~10%; headcount reduced by ~1,000, closures of unprofitable franchises and Sytner Select footprint reductions implemented.
Recast Impact and Q4 Headwinds to EBT
Q4 EBT impacted by estimated one-time items of $29 million ($0.32/share) including UK social programs ~$3M, Jaguar/Land Rover cyber event ~$8M (~800 units lost), freight weakness (Premier Truck ~$11M, PTS ~$5M), and strategic divestiture costs ~$2M; higher tax rate reduced net income by ~$8M ($0.12/share).
Used Vehicle Supply and Mix Constraints
Used vehicle sales constrained by fewer lease returns (lease returns were ~7% of used sales in 2025 vs 11% in 2024), affordability and competition for inventory; Sytner Select experienced lower volumes and mix shifts that pressured used GPU seasonally.
Near-Term Headwinds to Q1 2026 Cadence
Management expects Q1 2026 headwinds from prior-year pull-forward (tariff-related) and registration/tax timing, implying a tougher comp in Q1 before expected stronger Q2 seasonal performance.
Low Reported Cash on Hand
Company ended December with $65 million of cash (liquidity $1.6 billion), indicating reliance on available credit/facilities despite healthy operating cash flow and liquidity.
Company Guidance
Penske guided to a cautiously optimistic 2026 tone: management expects a recovery in the commercial truck market and a stronger U.S. macro backdrop aided by the “One Big Beautiful Bill” (bonus depreciation they estimate will add $120–$150M of cash flow annually), tax refunds, lower interest rates and GDP growth, while warning Q1 will face headwinds from prior-year tariff/BEV pull‑forwards and U.K. tax timing. Key metrics cited include 2025 results of 485,000 new/used vehicles and ~19,000 commercial trucks, $31.0B revenue, ~ $1.3B EBT, $935M net income and $14.13 EPS; Q4 revenue of $7.8B (‑4%), Q4 EBT $256M (adjusted $263M), Q4 net income $186M (adjusted $192M) and Q4 EPS $2.83 (adjusted $2.91); 2025 EBITDA $1.5B, cash flow from operations $1.0B and free cash flow $651M after $325M CapEx. Capital allocation/growth targets include acquisitions adding $1.6B of estimated annualized revenue, divestitures of ~$700M in revenue generating $200M proceeds (expect ~$140M more proceeds in 2026), $182M of share repurchases (1.2M shares, ~1.8% of float) with $247.5M remaining capacity, a dividend raised to $1.40 per share (21st consecutive increase) with a 37.4% payout ratio and ~3.4% forward yield, non-vehicle long-term debt of $2.17B, floorplan of $4.1B, total inventory $4.8B (49-day new and 49-day used supply; new: premium 52 days/volume 34 days; used: U.S. 34 days/U.K. 66 days), cash $65M and liquidity $1.6B, and a target to keep leverage well under 2.0 (current ~1.5).Penske Automotive Group Financial Statement Overview
Summary
Penske Automotive Group exhibits strong revenue growth and improved profitability, with a significant reduction in leverage. The company demonstrates solid cash flow generation, supporting its financial stability. However, there is room for improvement in operating efficiency and further strengthening of the equity base.Income Statement
Penske Automotive Group shows strong revenue growth with a TTM growth rate of 34.2%, indicating robust sales performance. The gross profit margin is stable at around 16.5%, and the net profit margin has improved to 6.35% in the TTM, reflecting enhanced profitability. However, EBIT and EBITDA margins have slightly decreased, suggesting some pressure on operating efficiency.78
Positive
Balance Sheet
The company's debt-to-equity ratio has significantly improved to 0.03 in the TTM, indicating reduced leverage and a stronger equity position. Return on equity remains healthy at 20.97%, showcasing effective use of shareholder funds. However, the equity ratio is low, suggesting a high reliance on debt financing historically.65
Positive
Cash Flow
Penske Automotive Group's free cash flow has grown by 5.18% in the TTM, demonstrating solid cash generation. The operating cash flow to net income ratio is strong at 1.41, indicating good cash conversion. The free cash flow to net income ratio is also healthy at 0.69, reflecting efficient cash management.72
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 31.81B | 30.46B | 29.53B | 27.81B | 25.55B |
| Gross Profit | 5.22B | 5.01B | 4.93B | 4.84B | 4.44B |
| EBITDA | 1.45B | 1.68B | 1.79B | 2.11B | 1.82B |
| Net Income | 935.40M | 918.90M | 1.05B | 1.38B | 1.19B |
Balance Sheet | |||||
| Total Assets | 17.60B | 16.72B | 15.67B | 14.11B | 13.46B |
| Cash, Cash Equivalents and Short-Term Investments | 64.70M | 72.40M | 96.40M | 106.50M | 100.70M |
| Total Debt | 8.72B | 8.27B | 7.74B | 6.95B | 6.40B |
| Total Liabilities | 12.02B | 11.49B | 10.92B | 9.94B | 9.37B |
| Stockholders Equity | 5.58B | 5.21B | 4.73B | 4.15B | 4.07B |
Cash Flow | |||||
| Free Cash Flow | 650.50M | 811.10M | 718.30M | 1.18B | 1.04B |
| Operating Cash Flow | 975.10M | 1.18B | 1.09B | 1.46B | 1.29B |
| Investing Cash Flow | -175.00M | -1.04B | -572.30M | -641.70M | -623.10M |
| Financing Cash Flow | -825.50M | -164.70M | -531.10M | -798.00M | -615.50M |
Penske Automotive Group Technical Analysis
Negative
157.52
Price Trends
162.41
Negative
161.90
Negative
166.26
Negative
Market Momentum
-0.62
Positive
42.28
Neutral
9.30
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PAG, the sentiment is Negative. The current price of 157.52 is below the 20-day moving average (MA) of 163.10, below the 50-day MA of 162.41, and below the 200-day MA of 166.26, indicating a bearish trend. The MACD of -0.62 indicates Positive momentum. The RSI at 42.28 is Neutral, neither overbought nor oversold. The STOCH value of 9.30 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PAG.
Penske Automotive Group Risk Analysis
Penske Automotive Group disclosed 24 risk factors in its most recent earnings report. Penske Automotive Group reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Penske Automotive Group Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $10.66B | 11.45 | 16.56% | 3.14% | 2.25% | 8.92% | |
62 Neutral | $4.23B | 8.66 | 13.31% | ― | 8.07% | 60.95% | |
62 Neutral | $4.00B | 13.34 | 11.10% | 0.49% | 19.45% | -24.27% | |
62 Neutral | $6.87B | 8.79 | 12.36% | 0.64% | 8.56% | 17.84% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
60 Neutral | $6.12B | 13.91 | 7.46% | ― | 0.12% | 2.78% | |
58 Neutral | $6.88B | 11.52 | 27.05% | ― | 6.06% | -1.71% |
* Consumer Cyclical Sector Average
PAG
Penske Automotive Group
157.52
-5.83
-3.57%
ABG
Asbury
213.78
-54.62
-20.35%
AN
AutoNation
195.16
12.79
7.01%
KMX
CarMax
43.17
-39.80
-47.97%
GPI
Group 1 Automotive
325.74
-131.73
-28.80%
LAD
Lithia Motors
279.58
-62.36
-18.24%
Penske Automotive Group Corporate Events
Business Operations and StrategyM&A Transactions
Penske Automotive Group Expands with Major Dealership Acquisition
Positive
Nov 19, 2025
On November 19, 2025, Penske Automotive Group announced the acquisition of four franchised automotive dealerships, including Longo Toyota and Longo Lexus in California, and Longo Toyota of Prosper in Texas. This strategic acquisition, completed through a Membership Interests Purchase Agreement, is expected to add $1.5 billion in estimated annualized revenue and enhance Penske’s presence in the California and Texas markets. The purchase was funded through a combination of existing credit and a note payable to the seller. The transaction is anticipated to strengthen Penske’s relationship with Toyota and Lexus brands, expanding its operations and market reach.
The most recent analyst rating on (PAG) stock is a Buy with a $195.00 price target. To see the full list of analyst forecasts on Penske Automotive Group stock, see the PAG Stock Forecast page.
Business Operations and StrategyStock BuybackDividendsFinancial DisclosuresM&A Transactions
Penske Automotive Group Reports Q3 2025 Financial Results
Neutral
Oct 29, 2025
Penske Automotive Group reported its third-quarter 2025 results, showing a 1.4% increase in revenue to $7.7 billion compared to the same period in 2024. Despite growth in retail automotive service and parts revenue, net income attributable to common stockholders decreased by 6% due to challenges in the North American freight market and the U.K. auto retail market. The company repurchased 1.6% of its outstanding shares and repaid $550 million in senior subordinated notes, maintaining a leverage ratio of 1.0x. Additionally, Penske completed the acquisition of a Ferrari dealership in Italy and increased its quarterly dividend by 4.5%.
The most recent analyst rating on (PAG) stock is a Hold with a $190.00 price target. To see the full list of analyst forecasts on Penske Automotive Group stock, see the PAG Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.