Should You Investigate Penske Automotive Group, Inc. (NYSE:PAG) At US$147?

Penske Automotive Group, Inc. (NYSE:PAG), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$162 and falling to the lows of US$147. 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$147 reflective of the actual value of the mid-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

What's The Opportunity In Penske Automotive Group?

According to our valuation model, the stock is currently overvalued by about 40%, trading at US$147 compared to our intrinsic value of $105.36. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Penske Automotive Group’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Penske Automotive Group?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with a negative profit growth of -3.7% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Penske Automotive Group. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? If you believe PAG should trade below its current price, 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. The company’s price has climbed passed its true value, in addition to a risky 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?

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. You'd be interested to know, that we found 3 warning signs for Penske Automotive Group and you'll want to know about these.

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.