Penske Automotive Group (PAG) AI Stock Analysis

• Market Cap: $10.37B
• Dividend Yield: 3.14%
• Average Volume (3M): 280.65K
• Price to Earnings (P/E): 11.1
• Beta (1Y): 0.68
• Revenue Growth: 2.25%
• EPS Growth: 8.92%
• Country: US
• Employees: 28,700
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Auto - Dealerships
• EPS (TTM): 2.91
• Shares Outstanding: 65,858,550
• 10 Day Avg. Volume: 298,956
• 30 Day Avg. Volume: 280,651
• PEG Ratio: 4.17
• Price to Book (P/B): 1.88
• Price to Sales (P/S): 0.33
• P/FCF Ratio: 16.11
• Enterprise Value/Market Cap: 1.83
• Enterprise Value/Revenue: 0.62
• Enterprise Value/Gross Profit: 3.76
• Enterprise Value/Ebitda: 11.82
• 1Y Price Target: $187.00
• Price Target Upside: 18.72% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): 13.61
• Revenue Forecast (FY): $31.65B

• Rating: 63 Neutral
• Price Target: $168.00 ▲(6.65% Upside)
• Action: Downgraded Date: 02/28/26
• Date: Action: Downgraded 02/28/26

The score is driven primarily by solid but cooling financial performance (margin normalization, softer cash conversion, and meaningful leverage). Valuation is a positive offset (moderate P/E and ~3.4% yield), and the earnings call supports a constructive but cautious 2026 outlook. Technicals are the main drag, with the stock trading below major moving averages and weak momentum readings.

Positive Factors

Diversified scale of revenue

The company's large, diversified revenue base across new/used vehicle sales, parts & service, F&I and commercial trucks creates durable scale. That breadth cushions cycles in any single channel and supports stable dealer margins and bargaining power with OEMs over the medium term.

Recurring service & parts strength

Aftermarket operations produce higher-margin, recurring cash flows that are less cyclical than vehicle retailing. Steady technician productivity and rising fixed-ops gross profit bolster cash generation and margin resilience, supporting sustained free cash flow through macro swings.

Disciplined capital returns and M&A

Consistent dividend raises and active buybacks signal predictable capital allocation priorities and shareholder-friendly discipline. Combined with targeted acquisitions and divestitures, this indicates management balances growth and returns to enhance long-term ROE and portfolio quality.

Negative Factors

Meaningful leverage

Elevated leverage narrows financial flexibility and increases interest-rate sensitivity, limiting ability to invest or pursue opportunistic M&A during downturns. In an industry tied to credit conditions, this capital structure elevates risk if macro or freight conditions deteriorate.

Margin normalization

Sustained margin compression reduces earnings power and the buffer to absorb cyclical revenue volatility. If structural pressures persist (premium/BEV mix shifts, U.K. headwinds), restoring prior margins will require continuous operational improvement or favorable product mix.

Softening cash conversion

Declining free cash flow and imperfect conversion of earnings into cash constrain internal funding for capex, acquisitions and buybacks. Volatile FCF makes sustaining dividend growth and aggressive buybacks harder without leaning more on debt or asset sales over the medium term.

Penske Automotive Group Business Overview & Revenue Model

Company Description

Penske 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 Money

Penske 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 Financial Statement Overview

Summary

Revenue scale remains strong with steady growth into 2025, but profitability has normalized (net margin down to ~2.9% in 2025) and cash conversion has softened with lower free cash flow in 2025. Leverage is meaningful (debt-to-equity ~1.6x; total debt ~$8.7B), limiting flexibility if conditions weaken.

Income Statement

Revenue has grown steadily from 2021–2025 (with a 2020 decline), reaching $31.8B in 2025, but growth slowed to ~3.7% in 2025 after stronger gains in 2021–2022. Profitability remains positive but has clearly normalized from peak levels: net margin fell from ~5.0% (2022) to ~2.9% (2025), and operating margin also compressed versus 2021–2022. Overall, the income statement shows resilient scale and earnings power, but with cyclical margin pressure and moderating growth.

Balance Sheet

The balance sheet is supported by a growing equity base (equity up from ~$4.1B in 2021 to ~$5.6B in 2025) and solid returns on equity in the mid-to-high teens in 2024–2025. However, leverage is meaningful: debt-to-equity remains around ~1.6x in recent years, and total debt increased to ~$8.7B in 2025. This structure can work in a stable environment, but it leaves less flexibility if industry conditions weaken.

Cash Flow

Cash generation is positive, with 2025 operating cash flow of ~$975M and free cash flow of ~$651M, but free cash flow declined ~14% in 2025 after a stronger 2024. Free cash flow covers a moderate portion of net income (roughly two-thirds in 2023–2025), indicating earnings are not fully translating into free cash at peak efficiency. The trajectory points to solid but somewhat volatile cash conversion, with recent softening versus prior years.

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

• Technical Analysis Sentiment: Negative
• Last Price: 157.52
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: 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 Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAG	63 Neutral	$10.37B	11.15	16.56%	3.14%	2.25%	8.92%
ABG	62 Neutral	$4.12B	8.53	13.31%	―	8.07%	60.95%
GPI	62 Neutral	$3.88B	12.97	11.10%	0.49%	19.45%	-24.27%
LAD	62 Neutral	$6.54B	8.66	12.36%	0.64%	8.56%	17.84%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
KMX	60 Neutral	$6.12B	14.28	7.46%	―	0.12%	2.78%
AN	58 Neutral	$6.77B	11.44	27.05%	―	6.06%	-1.71%

Penske Automotive Group Corporate Events

Penske Automotive boosts dividend amid mixed 2025 results

On February 11, 2026, Penske Automotive Group reported that fourth-quarter 2025 revenue declined to $7.8 billion from $8.1 billion a year earlier, with net income attributable to common stockholders falling to $186.1 million and EPS to $2.83, reflecting weaker auto and commercial truck demand despite strong service and parts performance. For full-year 2025, revenue was flat at $31.8 billion while net income slipped 4% to $935.4 million, as the company benefited from record service and parts gross profit but faced softer new and used unit volumes, particularly from U.K. market weakness, premium-brand pull-forward effects, divestitures, and freight market softness.

The group continued to reshape its portfolio by divesting 23 non-strategic dealerships over the past two years while acquiring Penske Motor Group in November 2025 and signing deals in January 2026 for two Lexus stores in Florida, transactions expected to add roughly $2 billion in annualized revenue and deepen its presence in high-volume Toyota and Lexus franchises. Capital allocation remained shareholder-friendly, with 1.18 million shares repurchased in 2025, repayment of $550 million of notes at maturity in September 2025, and the board declaring a 1.4% increase in the quarterly dividend to $1.40 per share, payable March 5, 2026, marking the 21st consecutive quarterly dividend raise and underscoring confidence in cash generation amid a challenging operating environment.

The most recent analyst rating on (PAG) stock is a Buy 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.