Penske (PAG) Up 11.7% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Penske Automotive has shown a positive trend in its stock performance, with shares increasing by approximately 11.7% since the last earnings report, outperforming the S&P 500. The upcoming earnings release will be crucial in determining whether this trend continues or if a pullback occurs [1]. Financial Performance - Penske reported second-quarter 2025 adjusted earnings of $3.78 per share, a 4.7% increase year over year, surpassing the Zacks Consensus Estimate of $3.56 [2]. - The company achieved net sales of $7.66 billion, which fell short of the Zacks Consensus Estimate of $7.87 billion and represented a 0.4% decline from the previous year [2]. - Gross profit rose by 2.6% year over year to $1.30 billion, while operating income increased by 3% to $348.2 million [3]. Segment Performance - In the Retail Automotive segment, revenues decreased by 1.5% to $6.52 billion, missing estimates, with same-store retail units down 9.9% year over year [5][4]. - The Retail Commercial Truck segment saw revenues increase by 5.7% to $943.6 million, exceeding estimates, although gross profit slightly declined [6]. - The Commercial Vehicle Distribution and Other segment's revenues rose by 6.5% to $201.2 million, surpassing estimates, but gross profit decreased [7]. Financial Metrics - SG&A costs totaled $906.3 million, up 2.1% year over year. Cash and cash equivalents increased to $155.3 million, while long-term debt decreased to $906.7 million [8]. - The company repurchased 630,044 shares for $93.3 million, with $295.7 million remaining in stock repurchase authorization [9]. Dividend and Shareholder Returns - Penske increased its quarterly dividend by 6 cents to $1.32 per share, marking the 19th consecutive quarterly increase, with the dividend payment scheduled for September 3, 2025 [9]. Market Outlook - Recent estimates for Penske have been trending upward, indicating a promising outlook. The company holds a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the coming months [13]. Industry Comparison - Penske operates within the Zacks Automotive - Retail and Wholesale industry, where competitor Sonic Automotive has gained 16.6% over the past month, reporting a year-over-year revenue increase of 5.9% [14].