Penske Automotive Group Inc.’s (PAG) fourth-quarter 2013 earnings improved 19.3% to 68 cents from 57 cents reported in the year-ago quarter. The results also exceeded the Zacks Consensus Estimate by 2 cents. Net profit from continuing operations rose 19.3% to $61.7 million in the quarter from $51.7 million a year ago.
Revenues grew 15% year over year to $3.9 billion, surpassing the Zacks Consensus Estimate of $3.8 billion. Same-store retail revenues rose 12.4% to $3.5 billion. The year-over-year rise was driven by an 11.4% increase in total retail sales to 90,622 units, including a 9.8% increase in same-store retail sales to 87,924. Retail sales went up 11.2% in the U.S. and 11.9% internationally.
New Vehicle revenues escalated 10.5% to $1.98 billion on a 6.7% rise in sales to 49,510 units. Used Vehicle revenues rose 21.9% to $1.1 billion owing to a 17.8% increase in sales to 41,112 units. Revenues in the Service and Parts segment rose 10.2% to $399.8 million.
Revenues in the Fleet and Wholesale Vehicle segment decreased 19.9% to $173.8 million, while revenues from the Finance and Insurance segment rose 17.4% to $94 million. Revenues from the Commercial Vehicle and Car Rental segment amounted to $117.4 million in the fourth quarter of 2013.
Gross profit improved 14.2% to $586.4 million from $513.3 billion in the fourth quarter of 2012. Operating income augmented 15.9% to $106.7 million from $92.1 million a year ago.
Fiscal 2013 Performance
Penske’s earnings increased 20.5% to $2.76 per share for full-year 2013 from $2.29 in 2012, beating the Zacks Consensus Estimate of $2.72. Revenues for full-year 2013 increased 12.4% to $14.7 billion from $13.1 billion in 2012.
Financial Position
Penske had cash and cash equivalents of $49.8 million as of Dec 31, 2013, an increase from $43.5 million as of Dec 31, 2012. Long-term debt stood at $1.03 billion as of Dec 31, 2013, up from $917.1 million as of Dec 31, 2012.
Our Take
Penske sells new and previously-owned vehicles along with finance and insurance products. Apart from its franchises in the U.S. and Europe, the company offers repair and maintenance services. We are concerned about increasing competition, high inventory level and exposure to foreign exchange rates. Currently, it retains a Zacks Rank #4 (Sell).
Lithia Motors Inc. (LAD), AutoNation Inc. (AN) and Asbury Automotive Group, Inc. (ABG), all carrying Zacks Rank #2 (Buy), are some better-ranked automobile stocks worth considering.
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