Analyzing Rush Enterprises (RUSHA) & Penske Automotive Group (PAG)

Rush Enterprises (NASDAQ: RUSHA) and Penske Automotive Group (NYSE:PAG) are both retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, institutional ownership, analyst recommendations, risk, profitability and earnings.

Dividends

Penske Automotive Group pays an annual dividend of $1.36 per share and has a dividend yield of 2.8%. Rush Enterprises does not pay a dividend. Penske Automotive Group pays out 31.6% of its earnings in the form of a dividend. Penske Automotive Group has raised its dividend for 7 consecutive years.

Institutional & Insider Ownership

80.2% of Rush Enterprises shares are owned by institutional investors. Comparatively, 43.2% of Penske Automotive Group shares are owned by institutional investors. 11.2% of Rush Enterprises shares are owned by company insiders. Comparatively, 41.6% of Penske Automotive Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Rush Enterprises and Penske Automotive Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Rush Enterprises $4.71 billion 0.36 $172.12 million $2.29 18.78
Penske Automotive Group $21.39 billion 0.19 $613.30 million $4.31 11.25

Penske Automotive Group has higher revenue and earnings than Rush Enterprises. Penske Automotive Group is trading at a lower price-to-earnings ratio than Rush Enterprises, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and price targets for Rush Enterprises and Penske Automotive Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rush Enterprises 0 2 4 0 2.67
Penske Automotive Group 0 3 5 0 2.63

Rush Enterprises currently has a consensus target price of $51.00, indicating a potential upside of 18.60%. Penske Automotive Group has a consensus target price of $55.29, indicating a potential upside of 14.01%. Given Rush Enterprises’ stronger consensus rating and higher possible upside, research analysts plainly believe Rush Enterprises is more favorable than Penske Automotive Group.

Volatility & Risk

Rush Enterprises has a beta of 1.3, suggesting that its share price is 30% more volatile than the S&P 500. Comparatively, Penske Automotive Group has a beta of 1.49, suggesting that its share price is 49% more volatile than the S&P 500.

Profitability

This table compares Rush Enterprises and Penske Automotive Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rush Enterprises 3.64% 11.09% 3.85%
Penske Automotive Group 2.90% 17.56% 3.84%

Summary

Penske Automotive Group beats Rush Enterprises on 9 of the 17 factors compared between the two stocks.

About Rush Enterprises

Rush Enterprises, Inc. is an integrated retailer of commercial vehicles and related services. The Company operates through the Truck Segment, which includes its operation of a regional network of commercial vehicle dealerships under the name Rush Truck Centers. Through its Rush Truck Centers, it offers services, including retail sales of new and used commercial vehicles, aftermarket parts sales, service and repair facilities, financing, leasing and rental, and insurance products. As of December 31, 2016, the Company operated 100 Rush Truck Centers in 21 states. The Company’s Rush Truck Centers are located in Alabama, Arizona, California, Colorado, Florida, Georgia, Idaho, Kentucky, Missouri, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Tennessee, Texas, Utah and Virginia. Its Rush Truck Leasing provides full-service maintenance on customers’ vehicles. At Rush Truck Centers, it offers third-party financing to assist customers in purchasing new and used commercial vehicles.

About Penske Automotive Group

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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