Morningstar

Morningstar, Inc.

Equity Bottom-Up

We are not changing our fair value estimate on Penske Automotive Group as first-quarter numbers, although a bit weak, were still solid. Diluted EPS from continuing operations of $1.19 missed consensus of $1.23 while same-store automotive retail revenue fell 1.4% excluding foreign exchange headwinds. Penske gets a bit over one third of its business from the U.K., so Brexit weighing on the pound likely explains the $0.04 EPS hit from currency. The company also disclosed a $0.09 hit from…

<p>Penske Automotive Group receives 92% of its light-vehicle dealer revenue from import and luxury brands. This percentage is significantly higher than many dealers and helps mitigate the cyclical nature of auto sales; these brands have more-affluent customers who will not limit their discretionary spending as much as lower-income car buyers during a downturn. Despite this wealthy customer, the firm's operating margin tends to be on the lower end of the publicly traded dealers. The main reasons for…</p>

United States

Penske Automotive Group, Inc. operates franchised automobile dealerships. The Company's franchises are located throughout the United States, Puerto Rico and the United Kingdom.  Penske Automotive sells new and used vehicles as well as offers maintenance and repair services on all brands it represents.

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