Penske Automotive Group, Inc. operates as a transportation services company. The company operates through three segments: Retail Automotive, Retail Commercial Truck, and Other. It operates retail automotive and commercial vehicle dealerships principally in the United States 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; and related products and services, such as vehicle service and collision repair services, as well as placement of finance and lease contracts, third-party insurance products, and other aftermarket products. The company also operates 14 dealerships locations of heavy and medium duty trucks primarily under Freightliner and Western Star brand names, as well as offers a range of used trucks, and service and parts. 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 more than 70 dealership locations, including 3 company-owned retail commercial vehicle dealerships. As of December 31, 2015, it operated 355 automotive retail franchises, of which 181 franchises are located in the United States; and 174 franchises are located outside of the United States primarily in the United Kingdom. Penske Automotive Group, Inc. is headquartered in Bloomfield Hills, Michigan.
(Summary) (Company) (Chart)
18 July 2016
1yr Target $48.86
Payout Ratio 28.95%
1yr Cap Gain 37.75%
1yr Tot Return 40.79%
EPS (ttm) $3.73
EPS next yr $4.08
Forward P/E 8.70
EPS next 5yr 10.25%
1yr Price Support $41.82
Market Cap $3.02 Bil
Revenues $19.63 Bil
Earnings $332.80 Mil
Profit Margin 1.69%
Quick Ratio 0.20
Current Ratio 1.00
1yr RevGR 11.90%
3yr RevGR 14.18%
5yr RevGR 25.20%
1yr EarnGR 14.51%
3yr EarnGR 20.75%
5yr EarnGR 25.20%
1yr DivGR 19.51%
3yr DivGR 24.86%
5yr DivGR ---
Penske Automotive is an international transportation services company that operates automotive and commercial truck dealerships principally in the US and Western Europe, and distributes commercial vehicles, diesel engines, gas engines, power systems and related parts and services principally in Australia and New Zealand. The company employs more than 22,000 people worldwide.
In 2015 the company generated $19.3 billion in total revenue which was comprised of $17.9 billion from retail automotive dealerships, $944.1 million from retail commercial truck dealerships and $444.5 million from commercial vehicle distribution and other operations.
Retail Automotive Dealership. Penske Automotive is the second largest automotive retailer headquartered in the U.S. as measured by the $17.9 billion in total retail automotive dealership revenue the company generated in 2015. As of December 31, 2015, Penske operated 355 automotive retail franchises, of which 181 franchises are located in the U.S. and 174 franchises are located outside of the U.S. The franchises outside the U.S. are located primarily in the U.K.
In 2015, Penske retailed and wholesaled more than 523,000 vehicles with 61% of our total automotive dealership revenues in 2015 generated in the U.S. and Puerto Rico and 39% generated outside the U.S. The company offers over 40 vehicle brands, with 72% of their retail automotive dealership revenue in 2015 generated from premium brands, such as Audi, BMW, Mercedes-Benz and Porsche. Each of their dealerships offers a wide selection of new and used vehicles for sale. In addition the company generates higher-margin revenue at each of their dealerships through maintenance and repair services and the sale and placement of third-party finance and insurance products, third-party extended service and maintenance contracts, and replacement and aftermarket automotive products. Automotive dealerships represented 92.8% of the company's total revenues and 91.0% of the company's total gross profit in 2015.
Retail Commercial Truck Dealership. In November 2014, Penske acquired a controlling interest in a heavy and medium duty truck dealership group located primarily in Texas and Oklahoma which has been renamed Premier Truck Group (“PTG”). During 2015 Penske acquired an additional 5% of PTG bringing total ownership to 96%.
PTG operates fourteen locations, including ten full-service dealerships offering primarily Freightliner and Western Star branded trucks. Two of those locations, Chattanooga and Knoxville, were acquired in February 2015. PTG also offers a full range of used trucks available for sale as well as service and parts departments, many of which are open 24 hours a day, seven days a week. This business represented 4.9% of the company's total revenues and 5.1% of the company's total gross profit in 2015.
Commercial Vehicle Distribution. Penske is the exclusive importer and distributor of Western Star heavy-duty trucks (a Daimler brand), MAN heavy and medium duty trucks and buses (a VW Group brand), and Dennis Eagle refuse collection vehicles, together with associated parts across Australia, New Zealand and portions of the Pacific. This business, known as Penske Commercial Vehicles Australia, distributes commercial vehicles and parts to a network of more than 70 dealership locations, including three company-owned retail commercial vehicle dealerships.
In October 2014, Penske acquired MTU Detroit Diesel Australia Pty Ltd., a leading distributor of diesel and gas engines and power systems, principally representing MTU, Detroit Diesel, Mercedes-Benz Industrial, Allison Transmission and MTU Onsite Energy. This portion of the company has been renamed Penske Power Systems and it offers products across the on- and off-highway markets in Australia, New Zealand and portions of the Pacific. It also supports full parts and after-sales service through a network of branches, field locations and dealers. The on-highway portion of this business complements their existing Penske Commercial Vehicles distribution business.
These businesses represented 2.2% of our total revenues and 3.8% of our total gross profit in 2015.
New Vehicle Retail Sales.
In 2015, Penske retailed 233,524 new vehicles which generated 51.5% of the company's retail automotive revenues and 27.1% of the company's retail automotive dealership gross profit. New vehicles are typically acquired by dealerships directly from the manufacturer. Our dealerships finance the purchase of most new vehicles from the manufacturers through floor plan financing provided primarily by various manufacturers’ captive finance companies.
Used Vehicle Retail Sales.
In 2015, Penske retailed 198,459 used vehicles, which generated 30.3% of their retail automotive revenue and 12.6% of the company's retail automotive gross profit. The company acquires used vehicles from various sources including auctions open only to authorized new vehicle dealers, public auctions, trade-ins from consumers in connection with their purchase of a new vehicle from us and lease expirations or terminations. To improve customer confidence in their used vehicle inventory, each of their dealerships participates in all available manufacturer certification processes for used vehicles. If certification is obtained, the used vehicle owner is typically provided benefits and warranties similar to those offered to new vehicle owners by the applicable manufacturer. Most of our dealerships have implemented software tools which assist in procuring and selling used vehicles.
Vehicle Finance, Extended Service and Insurance Sales.
Finance, extended service and insurance sales represented 2.7% of our retail automotive revenue and 18.3% of our retail automotive gross profit in 2015. At the customers’ option, Penske can arrange third-party financing or leasing in connection with vehicle purchases and typically receive a portion of the cost of the financing or leasing paid by the customer for each transaction as a fee.
The company also offers their customers various vehicle warranty and extended protection products, including extended service contracts, maintenance programs, guaranteed auto protection, lease “wear and tear” insurance and theft protection products. The extended service contracts and other products that dealerships currently offer to customers are underwritten by independent third parties, including vehicle manufacturers’ captive finance companies.
The company offers finance and insurance products using a “menu” process, which is designed to ensure that the company offers their customers a complete range of finance, insurance, protection, and other aftermarket products in a transparent manner.
Service and Parts Sales.
Service and parts sales represented 10.2% of the company's retail automotive revenue and 41.6% of our retail automotive gross profit in 2015. The company generates service and parts sales in connection with warranty and non-warranty work performed at each of their dealerships. The company believes that their service and parts revenues benefit from the increasingly complex technology used in vehicles that makes it difficult for independent repair facilities to maintain and repair today’s automobiles.
The goal of each dealership is to make each vehicle purchaser a customer of the service and parts department. Dealerships keep detailed records of their customers’ maintenance and service histories, and many dealerships send reminders to customers when vehicles are due for periodic maintenance or service. The company also offer rapid repair services such as paint-less dent repair, headlight reconditioning, wheel repairs, tire sales and windshield replacement at most of our facilities in order to offer their customers the convenience of one-stop shopping for all of their automotive requirements. The company also operates 33 automotive collision repair centers.
Fleet and Wholesale Sales.
Fleet and wholesale sales represented 5.3% of the company's retail automotive revenue and 0.4% of our retail automotive gross profit in 2015. Fleet activities represent the sale of new units to customers that are deemed to not be retail customers such as cities, municipalities or rental car companies and are generally sold at contracted amounts. Wholesale activities relate to the sale of used vehicles generally to other dealers and occur at auction. Vehicles sold through this channel generally include units acquired by trade-in that do not meet certain standards or aged units.