Penske Automotive Group, Inc. (PAG)
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Penske Automotive Group PAG, a Zacks Rank #1 (Sturdy Buy), is a prolonged-term stock market place winner in the Zacks Retail and Wholesale sector. PAG strike an all-time large in rate previously this month, all although most shares hover in bear sector territory. A slight retreat in rate around the earlier several weeks provides investors with a strong shopping for possibility. The company’s longevity and ongoing stock price ascent talk to management’s ability to adapt to the at any time-altering marketplace landscape.
PAG sporting activities the greatest Zacks Momentum Design and style Score of ‘A’. The firm is element of the Zacks Automotive – Retail and Full Product sales market team, which ranks in the leading 8% out of far more than 250 Zacks Ranked Industries. Also be aware the favorable metrics for this business team under:
Impression Supply: Zacks Financial commitment Investigate
Historic investigate experiments counsel that about 50 percent of a stock’s rate appreciation is owing to its industry grouping. In actuality, the best 50% of Zacks Ranked Industries outperforms the bottom 50% by a aspect of a lot more than 2 to 1. It is no solution that investing in stocks that are element of foremost market groups can give us a leg up relative to the marketplace. By concentrating on main stocks within the top rated 50% of Zacks Ranked Industries, we can radically make improvements to our stock-finding results.
Enterprise Description
Penske Automotive Team is a diversified transportation products and services enterprise that operates automotive and industrial truck dealerships. PAG engages in the sale of new and utilized motor autos, relevant providers these as collision maintenance, as nicely as the placement of lease contracts and third-bash coverage goods.
PAG also distributes diesel and gas engines as perfectly as power techniques. The company operates 320 retail franchises, 23 made use of car or truck dealerships, and 37 business truck dealerships across the United States and Canada. Penske Automotive Group was integrated in 1990 and is centered in Bloomfield Hills, MI.
Earnings Tendencies and Future Estimates
PAG has crafted up an outstanding earnings heritage, surpassing earnings estimates in each of the final eleven quarters. Back again in April, the organization noted Q1 EPS of $4.76, a 20.81% shock over the $3.94 consensus estimate. PAG has sent a +17.73% regular earnings shock above the past four quarters.
The PAG growth motor is predicted to continue being hot this year, as analysts masking the transportation enterprise have amplified their total-yr EPS estimates by +15.41% in the earlier 60 days. The 2022 Zacks Consensus EPS Estimate now stands at $17.38, reflecting probable expansion of 13.74% relative to last yr. Sales are predicted to climb 10.53% to $28.24 billion.
Picture Supply: Zacks Expense Exploration
Let’s Get Technological
PAG shares have innovative above 45% in the past calendar year. Only shares that are in really effective uptrends are able to make this style of cost go though the sector will make a collection of lower lows. This is the kind of inventory we want to consist of in our portfolio – one that is trending effectively and receiving constructive earnings estimate revisions.
Picture Resource: StockCharts
Recognize how the 200-day going typical (blue line) is sloping up and has acted as support this yr during the bullish go. The inventory had been producing a series of larger highs through early June, and the latest pullback signifies a sound acquiring option. With both sturdy fundamentals and technicals, PAG is poised to keep on its outperformance.
Empirical investigation displays a robust correlation amongst in the vicinity of-time period inventory actions and developments in earnings estimate revisions. As we know, Penske Automotive has not long ago witnessed good revisions. As prolonged as this development continues to be intact (and PAG carries on to provide earnings beats), the inventory will likely proceed its bullish run this year. Careful traders might come to feel hesitant about investing in a stock that has occur this much more than decades, but the reality is this elite business is nonetheless outperforming.
Other Factors to Consider
Inspite of the substantial selling price run, PAG now trades fairly undervalued at just a 6.1 forward P/E. Its Cost/Profits ratio of .3 compares favorably to that of its sector (.31) and the S&P 500 (2.65).
Management is self-confident that long run earnings will be in a position to maintain greater dividend payments. Past yr, the corporation hiked its dividend four periods, and PAG has already increased it 2 times this yr. Penske currently pays an once-a-year dividend of $2.00, which translates to a 1.9% produce.
In one more trader-friendly go, Penske repurchased 1.9 million shares totaling $184.1 million via April 30th of this yr. The enterprise has an extra $46.3 million out there for repurchase under its existing share buyback plan.
Base Line
Good institutional obtaining need to carry on to supply a tailwind for the inventory price tag. PAG is rated favorably by our Model Score Types with an ‘A’ for Price and ‘A’ for Momentum, paving the way for an total ‘A’ VGM rating. This indicates that there is a powerful chance that momentum will proceed on the heels of solid income and earnings advancement.
Robust fundamentals blended with a sturdy complex development undoubtedly justify including shares to the mix. Backed by a leading industry team and strong history of earnings beats, it is not complicated to see why this corporation is a powerful financial investment. This extensive-expression stock marketplace winner proceeds to establish its doubters erroneous, and investors would be smart to contemplate PAG as a portfolio candidate if they have not presently carried out so.
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