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1. Company Snapshot

1.a. Company Description

Penske Automotive Group, Inc., a diversified transportation services company, operates automotive and commercial truck dealerships.The company operates through four segments: Retail Automotive, Retail Commercial Truck, Other, and Non-Automotive Investments.It operates dealerships under franchise agreements with various automotive manufacturers and distributors.


The company engages in the sale of new and used motor vehicles, and related products and services comprise vehicle and collision repair services, as well as placement of finance and lease contracts, third-party insurance products, and other aftermarket products; and wholesale of parts.It also operates a heavy and medium duty truck dealership, which offers Freightliner and Western Star branded trucks, as well as a range of used trucks, and maintenance and repair services.In addition, it imports and distributes Western Star heavy-duty trucks, MAN heavy and medium duty trucks, buses, and Dennis Eagle refuse collection vehicles with associated parts in Australia, New Zealand, and portions of the Pacific.


Further, the company distributes diesel and gas engines, and power systems.The company operates 320 retail automotive franchises, including 146 franchises located in the United States and 174 franchises located outside of the United States; 23 CarShop used vehicle dealerships in the United States and the United Kingdom; and 37 commercial truck dealerships in Texas, Oklahoma, Tennessee, Georgia, Utah, Idaho, Kansas, Missouri, and Oregon, as well as Canada.Penske Automotive Group, Inc.


was incorporated in 1990 and is headquartered in Bloomfield Hills, Michigan.

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1.b. Last Insights on PAG

Breaking News: Penske Automotive Group Inc reported Q4 2025 earnings of $2.91 per share missing estimates of $3.19 per share. This compares to earnings of $3.54 per share a year ago. The company achieved record Q4 and full year retail automotive service and parts revenue and related gross profit. Q4 same-store service & parts revenue increased 5%. The board of directors declared an increase in cash dividend to $1.40 per share. 1,178,411 shares were repurchased in 2025. Analysts recommend a hold.

1.c. Company Highlights

2. Penske Automotive Group's Q4 2025 Earnings: A Review of Financial Performance

Penske Automotive Group reported revenue of $31 billion for the year 2025, with earnings before taxes of $1.3 billion and net income of $935 million. Earnings per share (EPS) came in at $2.91, missing analyst estimates of $3.19. The company's financial performance was impacted by weaker premium sales in both the U.S. and U.K., tariff and BEV-related pull-forward, and macroeconomic conditions in the U.K. The company's gross profit per unit for used cars was $1,770 in Q4, flat compared to Q4 2024. The current P/E Ratio of 12.62 suggests that the stock is fairly valued, while the EV/EBITDA ratio of 12.39 indicates a moderate valuation.

Publication Date: Feb -15

📋 Highlights
  • Strong Financial Performance: Generated $31 billion in revenue, $1.3 billion in pre-tax earnings, and $14.13 EPS in Q4 2025.
  • Strategic Growth & Divestitures: Added $2 billion in annualized revenue via US/Italy dealership acquisitions, while exiting $700 million in underperforming markets.
  • Commercial Truck Optimism: Anticipates market recovery in 2026, with freight capacity tightening and onshoring trends boosting Penske’s logistics and rental businesses.
  • Parts & Service Growth: Aims for mid-single-digit growth in 2026, driven by AI investments, tech enhancements, and targeting high-mileage customer segments.
  • Used Car Market Adjustments: Q4 gross profit per unit flat at $1,770 due to mix shifts and tariffs, but expects Q1/Q2 2026 improvement with improved inventory strategies.

Operational Highlights

The company delivered 485,000 new and used vehicles and nearly 19,000 new and used commercial trucks in 2025. Penske Automotive Group continued to grow in the U.S. and Italy with the acquisition of 2 Toyota and 2 Lexus dealerships and 1 Ferrari dealership, representing $2 billion in estimated annualized revenue. The company also completed strategic divestitures representing approximately $700 million in revenue. The parts and service business has been a strong performer, with a mid-single-digit growth target for 2026.

Outlook and Guidance

Looking ahead to 2026, Penske Automotive Group expects a stronger macro environment in the U.S. and a recovery in the commercial truck market. The company anticipates revenue growth of 7.1% next year, driven by a spike in sales in Q2 as people come out of school and begin buying cars. The company's logistics business is growing, and it is being selective about new opportunities. The expected strong free cash flow of over $750 million will help the company manage its leverage, which is expected to remain around 1.5, below the target of 2.0.

Valuation and Return Metrics

The company's return on equity (ROE) stands at 16.03%, indicating a strong return on shareholders' equity. The net debt to EBITDA ratio is 5.38, suggesting a moderate level of indebtedness. The dividend yield of 3.02% provides a relatively stable source of return for investors. The free cash flow yield of 5.54% is also attractive, indicating a strong ability to generate cash.

3. NewsRoom

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Penske Q4 Earnings Miss Expectations, Dividend Raised

Feb -13

Source:

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Focus on These 5 Stocks That Recently Hiked Dividends

Feb -13

Source: zacks.com

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Penske Automotive Group, Inc. (PAG) Q4 2025 Earnings Call Transcript

Feb -12

Source: seekingalpha.com

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Penske (PAG) Reports Q4 Earnings: What Key Metrics Have to Say

Feb -11

Source: zacks.com

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Penske Automotive (PAG) Misses Q4 Earnings Estimates

Feb -11

Source: zacks.com

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PENSKE AUTOMOTIVE GROUP REPORTS FOURTH QUARTER AND FULL YEAR 2025 RESULTS

Feb -11

Source: prnewswire.com

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Exploring Analyst Estimates for Penske (PAG) Q4 Earnings, Beyond Revenue and EPS

Feb -10

Source: zacks.com

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Meixler Investment Management Ltd. Purchases New Holdings in Penske Automotive Group, Inc. $PAG

Feb -09

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.55%)

6. Segments

Retail Automotive

Expected Growth: 4.5%

Penske Automotive Group's 4.5% retail automotive growth is driven by increasing demand for luxury vehicles, strategic brand acquisitions, and expansion into high-growth markets. Additionally, the company's focus on used car sales, online retailing, and customer retention programs contribute to its growth momentum.

Retail Commercial Truck

Expected Growth: 4.8%

Strong demand for e-commerce and last-mile delivery drives growth in retail commercial truck sales for Penske Automotive Group, Inc. Additionally, increasing construction and infrastructure projects boost demand for heavy-duty trucks. Furthermore, government incentives for fleet modernization and emission reduction contribute to the 4.8% growth rate.

Other

Expected Growth: 5.2%

Penske Automotive Group's 5.2% growth in 'Other' segment is driven by increased demand for its commercial vehicle rental business, expansion of its logistics and transportation services, and strategic acquisitions. Additionally, growth in its Australian and New Zealand markets, as well as increased sales of used trucks, contribute to this growth.

7. Detailed Products

New Vehicles

Penske Automotive Group, Inc. sells new vehicles from various manufacturers such as Toyota, Ford, and BMW through its dealerships.

Used Vehicles

The company offers a wide range of certified pre-owned and used vehicles from various manufacturers.

Parts and Accessories

Penske Automotive Group, Inc. sells original equipment manufacturer (OEM) parts and accessories for various vehicle brands.

Service and Repair

The company offers vehicle maintenance and repair services through its dealerships and service centers.

Commercial Vehicles

Penske Automotive Group, Inc. sells commercial vehicles, including trucks and vans, from various manufacturers.

Fleet Management

The company offers fleet management services, including vehicle leasing and management solutions.

Collision Repair

Penske Automotive Group, Inc. offers collision repair services through its dealerships and service centers.

8. Penske Automotive Group, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Penske Automotive Group, Inc. is medium due to the presence of alternative transportation options such as public transportation, ride-sharing, and car-sharing services.

Bargaining Power Of Customers

The bargaining power of customers for Penske Automotive Group, Inc. is low due to the lack of negotiating power of individual customers and the high switching costs.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Penske Automotive Group, Inc. is medium due to the presence of multiple suppliers and the company's ability to negotiate prices.

Threat Of New Entrants

The threat of new entrants for Penske Automotive Group, Inc. is low due to the high barriers to entry, including high capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Penske Automotive Group, Inc. is high due to the presence of multiple competitors in the automotive retail industry and the need to maintain market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 26.65%
Debt Cost 3.95%
Equity Weight 73.35%
Equity Cost 9.99%
WACC 8.38%
Leverage 36.33%

11. Quality Control: Penske Automotive Group, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Penske Automotive Group

A-Score: 6.1/10

Value: 6.8

Growth: 7.0

Quality: 4.6

Yield: 5.0

Momentum: 5.0

Volatility: 8.3

1-Year Total Return ->

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Group 1 Automotive

A-Score: 5.0/10

Value: 7.0

Growth: 7.8

Quality: 3.5

Yield: 0.0

Momentum: 5.0

Volatility: 6.7

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Rush Enterprises

A-Score: 4.8/10

Value: 7.1

Growth: 4.7

Quality: 5.2

Yield: 2.0

Momentum: 3.0

Volatility: 7.0

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Asbury Automotive Group

A-Score: 4.7/10

Value: 7.7

Growth: 7.3

Quality: 3.7

Yield: 0.0

Momentum: 3.5

Volatility: 6.0

1-Year Total Return ->

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Lithia Motors

A-Score: 4.4/10

Value: 6.3

Growth: 6.7

Quality: 3.4

Yield: 1.0

Momentum: 3.0

Volatility: 6.0

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ACV Auctions

A-Score: 3.2/10

Value: 6.8

Growth: 5.4

Quality: 4.2

Yield: 0.0

Momentum: 0.5

Volatility: 2.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

171.35$

Current Price

171.35$

Potential

-0.00%

Expected Cash-Flows