It has been about a month since the last earnings report for Penske Automotive (PAG). Shares have added about 9.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Penske due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Penske Q3 Earnings Miss Expectations

Penske reported third-quarter 2024 adjusted earnings of $3.36 per share, which decreased 13.8% year over year and missed the Zacks Consensus Estimate of $3.48. Lower-than-expected results from the Retail Automotive segment contributed to the underperformance. The company registered net sales of $7.59 billion, missing the Zacks Consensus Estimate of $7.77 billion. The top line rose 2% from the year-ago quarter's level.

Penske’s gross profit in the reported quarter rose 1.9% on a year-over-year basis to $1.24 billion. The operating income contracted 4.3% to $317.4 million. Foreign currency transactions positively impacted revenues, net income and earnings per share (EPS) by $69 million, $1.7 million and 3 cents, respectively.

In the reported quarter, same-store retail units declined 8.5% year over year to 100,015. Within the Retail Automotive segment, same-store new-vehicle revenues were down 1.3% to $2.69 billion. Same-store used-vehicle revenues decreased 11.5% to $1.97 billion.

Segmental Performance

In the reported period, revenues in the Retail Automotive segment came in at $6.34 billion, which remained flat from the year-ago quarter's level. Our estimate was $6.62 billion. Total new and used vehicle deliveries fell 6% year over year to 107,261 units. Gross profit of $1.04 billion rose 1.6% year over year but lagged our estimate of $1.08 billion.

Revenues in the Retail Commercial Truck segment increased 10.2% to $1.06 billion and outpaced our estimate of $975.4 million. Gross profit in the segment was $157.1 million, up from $155.4 million reported in the year-earlier quarter. Our expectation was $162 million.

The Commercial Vehicle Distribution and Other segment’s revenues in the reported quarter increased 18.4% to $186.8 million and surpassed our estimate of $169.3 million. Gross profit came in at $44.6 million, which increased from $39.7 million reported in the year-ago period and beat our estimate of $43.7 million.

Financial Tidbits

In the quarter under review, SG&A costs totaled $885.2 million, up 3.7% year over year. As of Sept. 30, 2024, Penske had cash and cash equivalents of $91.9 million, down from $96.4 million as of Dec. 31, 2023. The long-term debt amounted to $1.13 billion, down from $1.42 billion as of Dec. 31, 2023.

During the quarter under discussion, PAG repurchased 0.4 million shares of common stock for $58.1 million. As of Sept. 30, 2024, $157.4 million of stock repurchase authorization remained outstanding.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

Currently, Penske has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Penske has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Penske is part of the Zacks Automotive - Retail and Whole Sales industry. Over the past month, Lithia Motors (LAD), a stock from the same industry, has gained 13.6%. The company reported its results for the quarter ended September 2024 more than a month ago.

Lithia Motors reported revenues of $9.22 billion in the last reported quarter, representing a year-over-year change of +11.4%. EPS of $8.21 for the same period compares with $9.25 a year ago.

Lithia Motors is expected to post earnings of $7.17 per share for the current quarter, representing a year-over-year change of -13%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.4%.

Lithia Motors has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report

Lithia Motors, Inc. (LAD) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research