Penske Forays into Italy - Analyst Blog

Zacks Investment Research
Posted: Mar 21, 2012 12:15 PM
Penske Forays into Italy - Analyst Blog

Penske Automotive Group Inc. (PAG) extended its international presence by forming a joint venture with a BMW MINI dealer group, operated by Andrea Mantellini and family in Bologna, Italy.

The joint venture aims to acquire and operate dealerships in northern Italy. It has already acquired the Mariani BMW/MINI dealership in Monza, Italy, located in a suburb of Milan. Milan is considered as the world’s top 20 and Europe’s top 10 business and financial centers with the highest average income in Italy.

Penske Automotive, based in Bloomfield Hills, Michigan, was established in 1990 and is the second-leading automotive retailer in the U.S. It offers a full range of about 40 vehicle brands. In addition to selling new and used vehicles, the retailer also sells higher margin products, such as finance, insurance and vehicle service contracts; maintenance repair services; replacement parts and aftermarket automotive products.

Penske offers a full range of vehicle brands with 95% of its total retail revenue coming from non-U.S. brands, and 69% from sales relating to premium brands such as Audi, BMW, Cadillac, Mercedes-Benz and Porsche. The company’s product mix helps it to maintain a strong foothold in both the U.S. and overseas markets, including Europe. It competes with AutoNation Inc. (AN) and Group 1 Automotive, Inc. (GPI).

The Zacks #1 Rank (Strong Buy) company posted a 23.7% increase in profit to 47 cents per share in the fourth quarter of 2011 from 38 cents per share in the corresponding quarter of the previous year. With this, the company has beaten the Zacks Consensus Estimate by 7 cents per share. In absolute terms, profits increased 21% to $43.0 million from $35.4 million in the fourth quarter of 2010.

The higher profit was attributable to strong performance of the company’s used vehicle business and the positive impact from its premium/luxury brand mix in both the U.S. and international markets.

Total revenue went up 10.8%, to $3.0 billion, mainly driven by a 10.6% increase in retail unit sales to 71,453 vehicles. Same store retail units rose 6.6% to 68,551 vehicles and same store retail revenues scaled up 5.9% to $2.6 million during the quarter.

AUTONATION INC (AN): Free Stock Analysis Report
GROUP 1 AUTO (GPI): Free Stock Analysis Report
PENSKE AUTO GRP (PAG): Free Stock Analysis Report
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