Penske Automotive Group (PAG) Stock Closes Higher on Truck-Lite Sale Speculation

NEW YORK (TheStreet) -- Shares of Penske Automotive Group (PAG) finished the day in the green, closing up by 1.60% to $50.79 on Friday afternoon, following a Reuters report suggesting the automotive retailer is considering the sale of its Truck-Lite Co. unit, a truck lighting, wiring harness and mirror maker, in a deal that could value the business at $1 billion.

The company, which is controlled by the billionaire and former race car driver Roger Penske, is said to have hired the investment bank Robert W. Baird & Co. to run an auction for Truck-Lite, sources told Reuters, adding that Truck-Lite has an annual EBITDA of close to $100 million.

Bloomfield Hills, MI.-based Penske Automotive Group is the world's second-largest automotive dealership group. Truck-Lite, which is based in Falconer, NY, manufactures lighting and safety accessories for the heavy-duty truck, trailer, and commercial vehicle sectors.

Separately, TheStreet Ratings team rates PENSKE AUTOMOTIVE GROUP INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate PENSKE AUTOMOTIVE GROUP INC (PAG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share, revenue growth, reasonable valuation levels and notable return on equity. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • PENSKE AUTOMOTIVE GROUP INC has improved earnings per share by 14.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PENSKE AUTOMOTIVE GROUP INC increased its bottom line by earning $3.38 versus $2.75 in the prior year. This year, the market expects an improvement in earnings ($3.72 versus $3.38).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.1%. Since the same quarter one year prior, revenues rose by 11.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, PENSKE AUTOMOTIVE GROUP INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • You can view the full analysis from the report here: PAG Ratings Report

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