NYSE:PAG

Stock Analysis Report

Penske Automotive Group

Executive Summary

Penske Automotive Group, Inc. operates as a transportation services company.

Rewards

Trading at 8.7% below its fair value

Earnings are forecast to grow 3.73% per year

Risk Analysis

Debt is not well covered by operating cash flow

Unstable dividend track record

Profit margins (1.9%) are lower than last year (3.1%)



Snowflake Analysis

Good value second-rate dividend payer.


Similar Companies

Share Price & News

How has Penske Automotive Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: PAG has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0.2%

PAG

-1.6%

US Specialty Retail

-1.2%

US Market


1 Year Return

3.9%

PAG

20.3%

US Specialty Retail

22.3%

US Market

Return vs Industry: PAG underperformed the US Specialty Retail industry which returned 23.7% over the past year.

Return vs Market: PAG underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

PAGIndustryMarket
7 Day0.2%-1.6%-1.2%
30 Day-4.6%-0.5%1.6%
90 Day-1.0%4.3%8.8%
1 Year7.6%3.9%22.2%20.3%25.0%22.3%
3 Year-2.5%-11.1%45.2%37.8%49.9%40.3%
5 Year15.1%0.1%50.1%37.3%77.6%58.0%

Price Volatility Vs. Market

How volatile is Penske Automotive Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Penske Automotive Group undervalued compared to its fair value and its price relative to the market?

9.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: PAG ($48.25) is trading below our estimate of fair value ($52.83)

Significantly Below Fair Value: PAG is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: PAG is good value based on its PE Ratio (9.3x) compared to the Specialty Retail industry average (17.1x).

PE vs Market: PAG is good value based on its PE Ratio (9.3x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: PAG is poor value based on its PEG Ratio (2.5x)


Price to Book Ratio

PB vs Industry: PAG is good value based on its PB Ratio (1.5x) compared to the US Specialty Retail industry average (1.5x).


Next Steps

Future Growth

How is Penske Automotive Group forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

3.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PAG's forecast earnings growth (3.7% per year) is above the savings rate (1.7%).

Earnings vs Market: PAG's earnings (3.7% per year) are forecast to grow slower than the US market (14.3% per year).

High Growth Earnings: PAG's earnings are forecast to grow, but not significantly.

Revenue vs Market: PAG's revenue (2.1% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: PAG's revenue (2.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PAG's Return on Equity is forecast to be low in 3 years time (15.1%).


Next Steps

Past Performance

How has Penske Automotive Group performed over the past 5 years?

13.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: PAG has high quality earnings.

Growing Profit Margin: PAG's current net profit margins (1.9%) are lower than last year (3.1%).


Past Earnings Growth Analysis

Earnings Trend: PAG's earnings have grown by 13.8% per year over the past 5 years.

Accelerating Growth: PAG's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: PAG had negative earnings growth (-38.6%) over the past year, making it difficult to compare to the Specialty Retail industry average (4.5%).


Return on Equity

High ROE: PAG's Return on Equity (16.2%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Penske Automotive Group's financial position?


Financial Position Analysis

Short Term Liabilities: PAG's short term assets ($5.2B) do not cover its short term liabilities ($5.3B).

Long Term Liabilities: PAG's short term assets ($5.2B) do not cover its long term liabilities ($5.7B).


Debt to Equity History and Analysis

Debt Level: PAG's debt to equity ratio (234.4%) is considered high.

Reducing Debt: PAG's debt to equity ratio has increased from 225.7% to 234.4% over the past 5 years.

Debt Coverage: PAG's debt is not well covered by operating cash flow (11.9%).

Interest Coverage: PAG's interest payments on its debt are well covered by EBIT (3.1x coverage).


Balance Sheet

Inventory Level: PAG has a high level of physical assets or inventory.

Debt Coverage by Assets: PAG's debt is not covered by short term assets (assets are 0.8x debt).


Next Steps

Dividend

What is Penske Automotive Group's current dividend yield, its reliability and sustainability?

3.39%

Current Dividend Yield


Dividend Yield vs Market

company3.4%marketbottom25%1.4%markettop25%3.7%industryaverage1.9%forecastin3Years3.6%

Current dividend yield vs market & industry

Notable Dividend: PAG's dividend (3.4%) is higher than the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: PAG's dividend (3.4%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, PAG has been paying a dividend for less than 10 years.

Growing Dividend: PAG's dividend payments have increased, but the company has only paid a dividend for 9 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (30.5%), PAG's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: PAG's dividends in 3 years are forecast to be well covered by earnings (32.6% payout ratio).


Next Steps

Management

What is the CEO of Penske Automotive Group's salary, the management and board of directors tenure and is there insider trading?

11.8yrs

Average management tenure


CEO

Roger Penske (82yo)

20.7yrs

Tenure

US$6,824,351

Compensation

Mr. Roger S. Penske has been Chairman of the Board and President of Pennsylvania International Raceway, Inc. since 1986. He serves as Managing Director at Transportation Resource Partners III, L.P. He has  ...


CEO Compensation Analysis

Compensation vs Market: Roger's total compensation ($USD6.82M) is above average for companies of similar size in the US market ($USD4.99M).

Compensation vs Earnings: Roger's compensation has been consistent with company performance over the past year.


Management Age and Tenure

11.8yrs

Average Tenure

57yo

Average Age

Experienced Management: PAG's management team is seasoned and experienced (11.8 years average tenure).


Board Age and Tenure

15.1yrs

Average Tenure

60yo

Average Age

Experienced Board: PAG's board of directors are seasoned and experienced ( 15.1 years average tenure).


Insider Trading

Insider Buying: PAG insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$256,70015 Nov 19
John Carlson
EntityIndividual
Role
Chief Financial Officer
Executive VP & CFO
Shares5,000
Max PriceUS$51.34
SellUS$246,25231 Oct 19
Kimberly McWaters
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares5,000
Max PriceUS$49.25
SellUS$121,37513 Sep 19
Shane Spradlin
EntityIndividual
Role
Chief Legal Officer
Executive VP
Shares2,500
Max PriceUS$48.55
SellUS$116,99704 Jun 19
Shane Spradlin
EntityIndividual
Role
Chief Legal Officer
Executive VP
Shares2,656
Max PriceUS$44.05
SellUS$395,06304 Jun 19
Robert Kurnick
EntityIndividual
Role
Member of the Board of Directors
President & Director
Shares8,579
Max PriceUS$46.05
SellUS$221,56001 Mar 19
John Barr
EntityIndividual
Shares5,000
Max PriceUS$44.31

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Roger Penske (82yo)

    Chairman

    • Tenure: 20.7yrs
    • Compensation: US$6.82m
  • Robert Kurnick (57yo)

    President & Director

    • Tenure: 13.7yrs
    • Compensation: US$1.96m
  • Anthony Pordon

    Executive Vice President of Investor Relations & Corporate Development

    • Hiro Ishikawa (56yo)

      Executive Vice President of International Business Development

      • Tenure: 15.6yrs
    • George Brochick (74yo)

      Executive Vice President of Strategic Development

      • Tenure: 17.1yrs
    • Shane Spradlin (49yo)

      Executive VP

      • Tenure: 12.1yrs
      • Compensation: US$1.80m
    • J.D. Carlson (49yo)

      Executive VP & CFO

      • Tenure: 4.6yrs
      • Compensation: US$1.79m
    • Bud Denker (60yo)

      Executive Vice President of Human Resources

      • Tenure: 4.5yrs
      • Compensation: US$1.75m
    • Terri Mulcahey

      Executive Vice President of Marketing & Business Development

      • Tenure: 4.5yrs
    • Rich Hook

      Executive VP & Chief Information Officer

      • Tenure: 4.7yrs

    Board Members

    • Mike Eisenson (63yo)

      Director

      • Tenure: 26.1yrs
      • Compensation: US$271.20k
    • Ronald Steinhart (78yo)

      Independent Director

      • Tenure: 18.8yrs
      • Compensation: US$277.30k
    • Roger Penske (82yo)

      Chairman

      • Tenure: 20.7yrs
      • Compensation: US$6.82m
    • Greg Penske (56yo)

      Chairman of Penske Motor Group and Chief Executive Officer of Penske Motor Group

      • Tenure: 27yrs
      • Compensation: US$13.26k
    • Robert Kurnick (57yo)

      President & Director

      • Tenure: 13.7yrs
      • Compensation: US$1.96m
    • Greg Smith (67yo)

      Independent Director

      • Tenure: 2.4yrs
      • Compensation: US$283.20k
    • H. Thompson (80yo)

      Lead Director

      • Compensation: US$295.28k
    • Kim McWaters (55yo)

      Independent Director

      • Tenure: 15.1yrs
      • Compensation: US$281.61k
    • Gerard Nieuwenhuys (56yo)

      Chairman of The Sytner Group

      • Tenure: 5.3yrs
    • Mik Yamanaka (55yo)

      Executive VP of Strategic Relationship Management & Director

      • Tenure: 1.1yrs

    Company Information

    Penske Automotive Group, Inc.'s company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: Penske Automotive Group, Inc.
    • Ticker: PAG
    • Exchange: NYSE
    • Founded:
    • Industry: Automotive Retail
    • Sector: Retail
    • Market Cap: US$3.917b
    • Shares outstanding: 81.06m
    • Website: https://www.penskeautomotive.com

    Number of Employees


    Location

    • Penske Automotive Group, Inc.
    • 2555 Telegraph Road
    • Bloomfield Hills
    • Michigan
    • 48302
    • United States

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    UA9DB (Deutsche Boerse AG)YesCommon StockDEEUROct 1996
    PAGNYSE (New York Stock Exchange)YesCommon StockUSUSDOct 1996

    Biography

    Penske Automotive Group, Inc. operates as a transportation services company. The company operates through four segments: Retail Automotive, Retail Commercial Truck, Other, and Non-Automotive Investments. It operates automotive and commercial truck dealerships principally in the United States, Canada, and Western Europe; and distributes commercial vehicles, diesel engines, gas engines, power systems, and related parts and services primarily in Australia and New Zealand. The company also engages in the sale of new and used motor vehicles of approximately 40 brands; and provision of vehicle services and collision repair services. In addition, it is involved in the sale and placement of third-party finance and insurance products, third-party extended service and maintenance contracts, and replacement and aftermarket automotive products. Further, the company distributes commercial vehicles and parts to a network of approximately 70 dealership locations, including 9 company-owned retail commercial vehicle dealerships. As of December 31, 2018, it operated 345 automotive retail franchises, of which 154 franchises are located in the United States; and 191 franchises are located outside of the United States primarily in the United Kingdom. The company also operated 20 dealership locations of heavy and medium duty trucks, offering primarily Freightliner and Western Star branded trucks, as well as a range of used trucks, and services and parts. Penske Automotive Group, Inc. is headquartered in Bloomfield Hills, Michigan. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/27 00:15
    End of Day Share Price2020/01/24 00:00
    Earnings2019/09/30
    Annual Earnings2018/12/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.