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Penske Automotive Group (PAG)
NYSE:PAG
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Penske Automotive Group (PAG) AI Stock Analysis

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Penske Automotive Group

(NYSE:PAG)

Rating:75Outperform
Price Target:
$185.00
▲(11.16%Upside)
Penske Automotive Group's overall stock score is driven by strong financial performance and positive corporate events. Valuation metrics show the stock is attractively priced, while technical indicators suggest potential short-term volatility. Positive earnings and strategic initiatives further support the stock's outlook despite some market challenges.
Positive Factors
Capital Allocation
Penske's capital allocation and diversification efforts are major positives, supported by strong free cash flow and low adjusted net leverage.
Financial Performance
Penske Automotive reported results that beat consensus estimates, leading to an increase in sales, EBITDA, and EPS estimates for future years.
Operational Efficiency
Penske continues to demonstrate strong fixed operations with efficiency gains per technician and technician growth.
Negative Factors
Market Pricing Concerns
Concerns arise as the market anticipates increased pricing due to strong March SAAR suggesting pulled-forward demand ahead of expected price hikes.
Tariffs and Supply Chain
The U.S. imposed a 25% tariff on imported vehicles and parts, prompting responses like order halts and plant shutdowns from Nissan, Stellantis, Mercedes and Volkswagen, and causing overall concerns on increased pricing and supply chain disruption.

Penske Automotive Group (PAG) vs. SPDR S&P 500 ETF (SPY)

Penske Automotive Group Business Overview & Revenue Model

Company DescriptionPenske Automotive Group (PAG) is a global transportation services company operating across diversified sectors including automotive retail and commercial truck dealerships. With a presence in North America, Europe, and Australia, PAG offers a wide range of vehicles including new and used cars, trucks, and related services. The company is headquartered in Bloomfield Hills, Michigan, and represents numerous brand franchises, providing customers with a comprehensive selection of vehicles and financial services.
How the Company Makes MoneyPenske Automotive Group generates revenue primarily through the sale of new and used vehicles, which constitutes the largest portion of its income. In addition to vehicle sales, the company earns money from finance and insurance products related to vehicle purchases, such as extended service contracts and vehicle protection plans. PAG also derives revenue from service and parts operations, offering maintenance, repair, and customization services. The company benefits from strategic partnerships with major automotive brands and financial institutions, enhancing its ability to provide competitive financing options and a broad inventory of vehicles. Furthermore, PAG's commercial truck operations add another revenue stream, selling and leasing commercial vehicles and providing related services.

Penske Automotive Group Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q1-2025)
|
% Change Since: 6.43%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted record revenue and strong performance in service and parts, as well as positive growth in earnings per share. However, challenges were noted in the used automotive market, high BEV discounting, and potential tariff impacts. The overall sentiment balances positive and negative aspects.
Q1-2025 Updates
Positive Updates
Record First Quarter Revenue
Revenue increased 2% to a record $7.6 billion, marking the seventh consecutive quarter of stable gross margin.
Strong Performance in Service and Parts
Service and parts revenue increased 6% to $789 million with a gross margin increase of 60 basis points to 58.6%.
Positive Earnings Per Share Growth
Earnings per share increased by 14% to $3.66, and adjusted earnings per share increased 6% to $3.39.
Increase in New Automotive Units
Delivered 120,000 new and used automotive units. New automotive units delivered increased 6% and 8% on a same-store basis.
SG&A Cost Control
On an adjusted basis, SG&A to gross profit declined by 70 basis points to 70.0%.
Improvement in BEV Inventory Management
Days' supply for BEVs improved to 56 days from 87 days in March last year.
Penske Transportation Solutions Growth
PTS earnings were up $3 million compared to the first quarter last year.
Negative Updates
Decline in Used Automotive Units
Used automotive units declined 16% and 11% on a same-store basis due to realignment of UK used-only dealerships.
High Discounting on BEV Sales
Average discount on BEVs from MSRP was over $7,400 during Q1.
Challenges in Logistics Revenue
PTS logistics revenue decreased 1%, and rental revenue declined 10% due to the freight recession.
Potential Impact of Tariffs
Freightliner is implementing a minimal price increase related to tariffs, with a surcharge of $3,000 on heavy-duty trucks.
Decline in Class 8 Truck Demand
The North American Class 8 market saw a 12% decline in Q1.
Company Guidance
In the Penske Automotive Group's first quarter 2025 earnings call, the company reported a 2% increase in revenue to a record $7.6 billion, with same-store retail automotive revenue up 2% and gross profit up 3%. Service and parts revenue increased by 6%, with gross margins improving 60 basis points to 58.6%. Earnings before taxes reached $337 million, while net income totaled $244 million, translating to earnings per share of $3.66, a 14% increase. On an adjusted basis, earnings before taxes rose 5% to $310 million, and net income was up 5% to $226 million, with adjusted earnings per share at $3.39, a 6% increase. The call highlighted a 70 basis point improvement in adjusted SG&A expenses as a percentage of gross profit and ongoing strategic efforts in inventory management and cost controls. The company also emphasized its diversified revenue streams, with 59% of revenue generated in North America, 31% in the UK, and 9% in other international markets.

Penske Automotive Group Financial Statement Overview

Summary
Penske Automotive Group demonstrates strong financial health with consistent revenue growth, solid profitability, and effective leverage management. The income statement, balance sheet, and cash flow scores indicate the company's stability and robust cash generation capabilities, although maintaining margins in a competitive market is crucial.
Income Statement
85
Very Positive
Penske Automotive Group has demonstrated consistent revenue growth with a TTM revenue of $30.61 billion, up from $30.46 billion annually. The gross profit margin stands at 16.45%, and the net profit margin is 3.1%, indicating strong profitability. Although EBIT margin decreased slightly to 4.26%, the company's ability to maintain solid margins in a competitive industry is commendable.
Balance Sheet
78
Positive
The balance sheet reflects a strong equity position with a debt-to-equity ratio of 0.77, indicating manageable leverage. The equity ratio is 31.85%, showcasing a solid capital structure. Return on equity is 17.57%, highlighting effective use of shareholder funds despite a high debt load.
Cash Flow
80
Positive
The cash flow statement shows robust operating cash flow at $971 million with a free cash flow of $464 million. The company maintains a healthy free cash flow to net income ratio of 0.49, indicating efficient cash generation relative to net income despite a decrease in free cash flow growth.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue30.61B30.46B29.53B27.81B25.55B20.44B
Gross Profit5.04B5.01B4.93B4.84B4.44B3.18B
EBITDA1.54B1.68B1.65B2.06B1.80B942.70M
Net Income948.00M918.90M1.05B1.38B1.19B543.60M
Balance Sheet
Total Assets16.93B16.72B15.67B14.11B13.46B13.25B
Cash, Cash Equivalents and Short-Term Investments118.40M72.40M96.40M106.50M100.70M49.50M
Total Debt4.14B8.27B7.74B6.95B6.40B7.18B
Total Liabilities11.52B11.49B10.92B9.94B9.37B9.92B
Stockholders Equity5.39B5.21B4.73B4.15B4.07B3.30B
Cash Flow
Free Cash Flow464.10M811.10M718.30M1.18B1.04B1.02B
Operating Cash Flow971.10M1.18B1.09B1.46B1.29B1.20B
Investing Cash Flow-681.10M-1.04B-572.30M-641.70M-623.10M-136.50M
Financing Cash Flow-89.30M-164.70M-531.10M-798.00M-615.50M-1.05B

Penske Automotive Group Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price166.42
Price Trends
50DMA
169.37
Negative
100DMA
161.05
Positive
200DMA
159.19
Positive
Market Momentum
MACD
0.23
Positive
RSI
39.98
Neutral
STOCH
8.23
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PAG, the sentiment is Neutral. The current price of 166.42 is below the 20-day moving average (MA) of 176.44, below the 50-day MA of 169.37, and above the 200-day MA of 159.19, indicating a neutral trend. The MACD of 0.23 indicates Positive momentum. The RSI at 39.98 is Neutral, neither overbought nor oversold. The STOCH value of 8.23 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PAG.

Penske Automotive Group Risk Analysis

Penske Automotive Group disclosed 23 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

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
ABABG
78
Outperform
$4.52B10.9411.92%11.11%-23.41%
PAPAG
75
Outperform
$10.92B11.6318.57%2.87%3.29%-1.29%
ANAN
71
Outperform
$7.42B11.6428.45%-0.24%-19.76%
GPGPI
71
Outperform
$5.32B11.5816.25%0.59%15.13%-15.98%
LALAD
67
Neutral
$8.01B9.7012.95%0.87%12.96%-6.25%
KMKMX
66
Neutral
$9.40B17.328.97%3.17%42.14%
64
Neutral
£1.71B10.366.12%4.48%0.55%-32.84%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PAG
Penske Automotive Group
166.42
14.38
9.46%
ABG
Asbury
229.96
-21.97
-8.72%
AN
AutoNation
198.89
25.76
14.88%
KMX
CarMax
61.47
-19.32
-23.91%
GPI
Group 1 Automotive
411.96
104.97
34.19%
LAD
Lithia Motors
310.14
56.25
22.16%

Penske Automotive Group Corporate Events

Stock BuybackDividendsBusiness Operations and Strategy
Penske Automotive Amends Services Agreement with Mitsui
Positive
May 16, 2025

On May 14, 2025, Penske Automotive Group announced an amended services agreement with Mitsui & Co (U.S.A.), Inc., involving strategic development in transportation industries and new technology evaluation. The agreement includes a quarterly fee and a stockholders agreement ensuring board representation for Mitsui based on its stock ownership. Additionally, Penske Automotive’s Board approved a 3.3% increase in quarterly dividends to $1.26 per share and expanded securities repurchase authorization by $250 million, reflecting the company’s ongoing financial growth and commitment to shareholder returns.

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 StrategyFinancial Disclosures
Penske Automotive Reports Record Q1 Revenue for 2025
Positive
Apr 30, 2025

Penske Automotive Group reported a record first-quarter revenue of $7.6 billion for 2025, marking a 2% increase from the previous year. The company saw a 14% rise in net income attributable to common stockholders, reaching $244.3 million, with earnings per share also increasing by 14% to $3.66. Despite challenges such as a negative impact from foreign currency exchange, the company benefited from a diversified business model and improved gross profit margins in its retail automotive service and parts segment. The company continues to monitor the impact of tariffs and remains flexible in adapting to changes in the automotive landscape.

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.Date of analysis: Jul 18, 2025