Penske Automotive Group, Inc. (NYSE: PAG) stock falls despite a positive start

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Penske Automotive Group, Inc. (NYSE: PAG) stock lost over 2.1% on April 26th, 2018 (as of 11:46 AM GMT-4; Source: Google finance) despite a positive start.Even though total automotive units retailed rose 6.4%, the growth was flat on a same-store basis. The same-store retail revenue rose 8.5% or 2.71 excluding foreign exchange. Their same-store units, new units retail fell 1.6%, but the same-store gross profit per unit rose $110 to $3,039

Moreover, based on their margin in Q1, the used vehicle frontend growth was impacted by $120 per unit. The group expects a lower gross margin over the next coming months.

On the other hand, the overall the total revenues rose 13.1% to $5.7 billion while earnings before taxes rose 15.7% to $145 million. 73% of the pretax came from retail automotive, while 8% came from the retail commercial truck business and 19% came from Penske Truck Leasing investment, Australia and other joint venture investments. The Income from continuing operations rose 29.8% to $108 million while earnings per share enhanced 29.9% to a $1.26. Their EBITDA rose 16% to just under $200 million and their tax rate for the quarter was 25.4% from 33% in 2017 Q1.

The Same store variable gross profit per unit rose $183 to $3,590, while the same-store gross profit per unit increased $110 to $3,039. The Same-store new vehicle gross margin was at 7.4%. During the first quarter, these business retailed 18,673 units and had $331 million in revenue. The average transaction price was just under $15,000 at 14.9% and the variable gross profit was $2,233 per unit. That margin was 15%. The group also identified six new Greenfield locations and forecast to have all these locations up and running by the end of 2020.

Meanwhile, as per 2018 Ag data estimates, North American Class VIII, that’s heavy duty tractor retail sales is $315,000 and this would represent a 25% increase year-over-year. Additionally, the North American Class VI and VII, which is midrange retail sales are expected to rise over 3% to over $150,000.

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