You’ll receive your new Investment Digest issue by email this afternoon. Here’s one more growth-and-value idea to tide you over, from Upside Editor Richard Moroney.
“Penske Automotive Group, Inc. (PAG, NYSE), the number two auto retailer in the U.S., operates more than 340 franchises, including nearly 170 locations in Europe. The company delivered a solid March quarter, as per-share earnings from operations rose 15% to $0.63, topping the consensus by a penny. Revenue increased 8%. But concerns regarding weak demand in Europe have contributed to the stock’s middling performance, as shares have risen 10% this year. March-quarter international sales rose 4.5%, versus 13% in the U.S. Same-store sales in foreign markets rose 1%, compared to 11.5% in the U.S. Foreign sales accounted for 37% of total revenue in the quarter.
Rebound Thesis
“A recovering U.S. economy should help results. Spurred by pent-up demand and cheap financing, car sales have been solid this year even as retail spending on clothing and other goods remains sluggish. In addition, steady store expansion, market-share gains, and acquisitions should help sustain growth. Expanding profit margins, partly reflecting improved cost controls, should boost profit margins. For 2013, per-share earnings are expected to increase 13% to $2.57, on 9% sales growth. On May 9, Penske raised its quarterly per-share dividend 7% to $0.15, payable on June 3. The stock, yielding nearly 2%, is rated Buy.”
Richard J. Moroney, CFA, Upside, www.upsidestocks.com, 800-233-5922, 6/3/13