Is Now An Opportune Moment To Examine Penske Automotive Group, Inc. (NYSE:PAG)?

Penske Automotive Group, Inc. (NYSE:PAG) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$164 at one point, and dropping to the lows of US$145. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Penske Automotive Group's current trading price of US$153 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Penske Automotive Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Penske Automotive Group

Is Penske Automotive Group Still Cheap?

Penske Automotive Group appears to be overvalued by 23% at the moment, based on our discounted cash flow valuation. The stock is currently priced at US$153 on the market compared to our intrinsic value of $124.67. This means that the opportunity to buy Penske Automotive Group at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Penske Automotive Group’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Penske Automotive Group?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Penske Automotive Group, it is expected to deliver a negative earnings growth of -5.3%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? If you believe PAG is currently trading above its value, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to de-risk your portfolio. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on PAG for some time, now may not be the best time to enter into the stock. you may want to reconsider buying the stock at this time. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?

If you'd like to know more about Penske Automotive Group as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Penske Automotive Group has 3 warning signs and it would be unwise to ignore them.

If you are no longer interested in Penske Automotive Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.