Penske Automotive Group (PAG) versus Its Peers Critical Review

Penske Automotive Group (NYSE: PAG) is one of 20 public companies in the “Automotive dealers & gasoline service stations” industry, but how does it compare to its competitors? We will compare Penske Automotive Group to similar businesses based on the strength of its risk, analyst recommendations, earnings, dividends, valuation, institutional ownership and profitability.

Volatility and Risk

Penske Automotive Group has a beta of 1.49, indicating that its stock price is 49% more volatile than the S&P 500. Comparatively, Penske Automotive Group’s competitors have a beta of 10.08, indicating that their average stock price is 908% more volatile than the S&P 500.

Valuation and Earnings

This table compares Penske Automotive Group and its competitors gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Penske Automotive Group $21.39 billion $613.30 million 10.92
Penske Automotive Group Competitors $8.01 billion $220.23 million 12.57

Penske Automotive Group has higher revenue and earnings than its competitors. Penske Automotive Group is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares Penske Automotive Group and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Penske Automotive Group 2.90% 17.56% 3.84%
Penske Automotive Group Competitors 3.56% 23.38% 4.07%

Insider and Institutional Ownership

41.6% of Penske Automotive Group shares are owned by institutional investors. Comparatively, 62.0% of shares of all “Automotive dealers & gasoline service stations” companies are owned by institutional investors. 40.7% of Penske Automotive Group shares are owned by insiders. Comparatively, 16.5% of shares of all “Automotive dealers & gasoline service stations” companies are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Penske Automotive Group and its competitors, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Penske Automotive Group 0 3 5 0 2.63
Penske Automotive Group Competitors 119 635 682 30 2.42

Penske Automotive Group currently has a consensus price target of $55.29, indicating a potential upside of 17.48%. As a group, “Automotive dealers & gasoline service stations” companies have a potential upside of 14.73%. Given Penske Automotive Group’s stronger consensus rating and higher probable upside, equities analysts plainly believe Penske Automotive Group is more favorable than its competitors.

Dividends

Penske Automotive Group pays an annual dividend of $1.36 per share and has a dividend yield of 2.9%. Penske Automotive Group pays out 31.6% of its earnings in the form of a dividend. As a group, “Automotive dealers & gasoline service stations” companies pay a dividend yield of 1.6% and pay out 20.5% of their earnings in the form of a dividend. Penske Automotive Group has increased its dividend for 7 consecutive years.

Summary

Penske Automotive Group competitors beat Penske Automotive Group on 8 of the 15 factors compared.

Penske Automotive Group Company Profile

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 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 8 company-owned retail commercial vehicle dealerships. As of December 31, 2017, it operated 343 automotive retail franchises, of which 155 franchises are located in the United States; and 188 franchises are located outside of the United States primarily in the United Kingdom. The company also operated 20 dealerships 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.

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