Penske Automotive Group, Inc.

PAG

Retail-Auto Dealers & Gasoline Stations

Mkt Cap

$10.15B

PE

10.47

Debt

$1.893B

Cash

$116.9M

EV

$11.93B

FCF

$863M

Market Cap

$10.15B

P/E Ratio

10.47

Debt

$1.893B

Cash

$116.9M

EV

$11.93B

FCF

$863M

Charts data: {"Earnings":[{"time":"2014-12-30","value":286700000},{"time":"2015-12-30","value":326100000},{"time":"2016-12-30","value":342900000},{"time":"2017-12-30","value":612800000},{"time":"2018-12-30","value":470300000},{"time":"2019-12-30","value":435100000},{"time":"2020-12-30","value":543600000},{"time":"2021-12-30","value":1187800000},{"time":"2022-12-30","value":1380000000},{"time":"2023-12-30","value":1053200000}],"Sales":[{"time":"2014-12-30","value":17177200000},{"time":"2015-12-30","value":19284900000},{"time":"2016-12-30","value":20118500000},{"time":"2017-12-30","value":21386900000},{"time":"2018-12-30","value":22785100000},{"time":"2019-12-30","value":23179400000},{"time":"2020-12-30","value":20443900000},{"time":"2021-12-30","value":25554700000},{"time":"2022-12-30","value":27814800000},{"time":"2023-12-30","value":29527400000}],"Net Margins":[{"time":"2014-12-30","value":0.016690729571757913},{"time":"2015-12-30","value":0.016909602849898106},{"time":"2016-12-30","value":0.017044014215771553},{"time":"2017-12-30","value":0.02865305397229145},{"time":"2018-12-30","value":0.020640681849103143},{"time":"2019-12-30","value":0.01877097767845587},{"time":"2020-12-30","value":0.02658983853374356},{"time":"2021-12-30","value":0.04648068652733157},{"time":"2022-12-30","value":0.04961387462789594},{"time":"2023-12-30","value":0.03566856546800599}],"Assets":[{"time":"2014-12-30","value":7228200000},{"time":"2015-12-30","value":8022700000},{"time":"2016-12-30","value":8861100000},{"time":"2017-12-30","value":10540600000},{"time":"2018-12-30","value":10904500000},{"time":"2019-12-30","value":13942700000},{"time":"2020-12-30","value":13247200000},{"time":"2021-12-30","value":13464600000},{"time":"2022-12-30","value":14114600000},{"time":"2023-12-30","value":15671500000}],"Stockholders Equity":[{"time":"2014-12-30","value":1681200000},{"time":"2015-12-30","value":1834900000},{"time":"2016-12-30","value":1779500000},{"time":"2017-12-30","value":2428000000},{"time":"2018-12-30","value":2634700000},{"time":"2019-12-30","value":2811600000},{"time":"2020-12-30","value":3326100000},{"time":"2021-12-30","value":4095000000},{"time":"2022-12-30","value":4174800000},{"time":"2023-12-30","value":4755600000}],"ROE":[{"time":"2014-12-30","value":0.170532952652867},{"time":"2015-12-30","value":0.1777208567224372},{"time":"2016-12-30","value":0.19269457712840685},{"time":"2017-12-30","value":0.25238879736408565},{"time":"2018-12-30","value":0.17850229627661593},{"time":"2019-12-30","value":0.1547517427799118},{"time":"2020-12-30","value":0.16343465319743844},{"time":"2021-12-30","value":0.29006105006105004},{"time":"2022-12-30","value":0.33055475711411325},{"time":"2023-12-30","value":0.2214652199512154}],"ROA":[{"time":"2014-12-30","value":0.06974073766636231},{"time":"2015-12-30","value":0.0706121380582597},{"time":"2016-12-30","value":0.0648790782182799},{"time":"2017-12-30","value":0.05800428818093847},{"time":"2018-12-30","value":0.060974826906323075},{"time":"2019-12-30","value":0.04681302760584392},{"time":"2020-12-30","value":0.053415061295971976},{"time":"2021-12-30","value":0.11940198743371508},{"time":"2022-12-30","value":0.13172176328057472},{"time":"2023-12-30","value":0.09057843856682513}]}

Penske Automotive Group, Inc., a diversified transportation services company, operates automotive and commercial truck dealerships in the United States and internationally. 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 is also involved in the sale of new and used motor vehicles, maintenance and repair services, sale and placement of third-party finance and insurance products, third-party extended service and maintenance contracts, replacement and aftermarket automotive products, collision repair services, and wholesale of parts. In addition, it operates a heavy and medium duty truck dealership, which offers Freightliner and Western Star branded trucks, as well as offers a range of used trucks. Further, it imports and distributes Western Star heavy-duty trucks, MAN heavy and medium duty trucks and buses, and Dennis Eagle refuse collection vehicles with associated parts. Additionally, the company distributes diesel and gas engines, and power systems. Penske Automotive Group, Inc. was incorporated in 1990 and is headquartered in Bloomfield Hills, Michigan.

Sector

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9/30/23
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12/31/22
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9/30/18
10-Q
6/30/18
10-Q
3/31/18
10-K
12/31/17

DCF

Discounted Cash Flow Valuation of Penske Automotive Group, Inc.

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$863M	$1.108B	$1.394B	$1.718B	$2.072B	$2.445B	$2.822B	$3.183B	$3.508B	$3.775B	$3.963B	$39.63B
DCF		$963.7M	$1.054B	$1.13B	$1.185B	$1.216B	$1.22B	$1.197B	$1.147B	$1.073B	$979.7M	$9.797B
Value	$20.96B

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth 19%

Earnings Stability 73%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is too low to guarantee profitability in case of higher costs or higher interest rates. Furthermore lower margins cause higher earnings’ volatility.

Over time the ROA has been increasing indicating a higher marginal ROA with respect to the calculated one, giving a good sign for continued growth.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Net Margin	1.7%	1.7%	2.9%	2.1%	1.9%	2.7%	4.6%	5%	3.6%	3.3%
ROA	7.1%	6.5%	5.8%	6.1%	4.7%	5.3%	12%	13%	9.1%	8.3%
ROE	18%	19%	25%	18%	15%	16%	29%	33%	22%	20%

What is the average Net Margin?

The average Net Margin over the past 5 years is +3.3%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is +0.54%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +8.38%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is +1.34%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +22.31%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is +2.48%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

Under the assumption that FCF does not diminish and debt does not increase, the current years to repay the debt are acceptable.

The Graham’s stability indicate reliability of earnings, and consideration about the future are more dependable.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Debt FCF	6.84	11.86	5.95	7.48	9.02	1.75	1.49	1.44	2.56	2.19
Debt Equity	0.72	1.08	0.92	0.88	0.88	0.53	0.38	0.41	0.39	0.39
MIN
Graham Stability	-	-	100%	100%	92%	100%	100%	100%	100%	92%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 2.19.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is -1.36.

What is the Graham’s Stability?

Graham’s Stability measure stands at 0.92.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has been increasing in past years.

Years	12-2016	12-2018	12-2020	12-2022	Trend
Revenue	5.6%	5.3%	13%	6.2%	0.14%
Net Income	17%	17%	25%	-24%	0.19%
Stockholders Equity	15%	13%	13%	14%	0.29%
FCF	24%	18%	-11%	-39%	-0.67%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +5.32%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is +0.14%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is +17.5%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is +0.19%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is +12.54%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is +0.29%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is +18.41%.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is -0.67%.