Penske Automotive Group (PAG) versus The Competition Critical Review

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

Volatility and Risk

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Penske Automotive Group has a beta of 1.47, suggesting that its stock price is 47% more volatile than the S&P 500. Comparatively, Penske Automotive Group’s competitors have a beta of 9.98, suggesting that their average stock price is 898% more volatile than the S&P 500.



Earnings and Valuation

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

Gross Revenue Net Income Price/Earnings Ratio
Penske Automotive Group $21.39 billion $613.30 million 10.25
Penske Automotive Group Competitors $8.01 billion $220.42 million 12.11

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 2.87% 17.67% 3.74%
Penske Automotive Group Competitors 3.22% 33.52% 3.60%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Penske Automotive Group and its competitors, as provided 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 115 620 667 29 2.43

Penske Automotive Group presently has a consensus price target of $55.29, suggesting a potential upside of 25.19%. As a group, “Automotive dealers & gasoline service stations” companies have a potential upside of 15.18%. Given Penske Automotive Group’s stronger consensus rating and higher probable upside, equities analysts clearly believe Penske Automotive Group is more favorable than its competitors.

Insider & Institutional Ownership

41.3% of Penske Automotive Group shares are held by institutional investors. Comparatively, 62.1% of shares of all “Automotive dealers & gasoline service stations” companies are held by institutional investors. 40.7% of Penske Automotive Group shares are held by company insiders. Comparatively, 16.5% of shares of all “Automotive dealers & gasoline service stations” companies are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Penske Automotive Group pays an annual dividend of $1.36 per share and has a dividend yield of 3.1%. 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 beats its competitors on 8 of the 15 factors compared.

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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