Global automotive retailer Penske Automotive Group (NYSE: PAG) met Wall Streets revenue expectations in Q3 CY2025, with sales up 1.4% year on year to $7.7 billion. Its non-GAAP profit of $3.23 per share was 5% below analysts’ consensus estimates.
Is now the time to buy Penske Automotive Group? Find out by accessing our full research report, it’s free for active Edge members.
Penske Automotive Group (PAG) Q3 CY2025 Highlights:
- Revenue: $7.7 billion vs analyst estimates of $7.7 billion (1.4% year-on-year growth, in line)
- Adjusted EPS: $3.23 vs analyst expectations of $3.40 (5% miss)
- Adjusted EBITDA: $357.1 million vs analyst estimates of $371.2 million (4.6% margin, 3.8% miss)
- Operating Margin: 3.9%, in line with the same quarter last year
- Free Cash Flow Margin: 3.9%, up from 2.5% in the same quarter last year
- Locations: 358 at quarter end, down from 360 in the same quarter last year
- Same-Store Sales rose 5.1% year on year (-4.8% in the same quarter last year)
- Market Capitalization: $10.42 billion
Company Overview
With a diverse global network spanning the US, UK, Canada, Germany, Italy, Japan, and Australia, Penske Automotive Group (NYSE: PAG) operates automotive and commercial truck dealerships across the globe, selling new and used vehicles while providing service, parts, and financing options.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
With $30.68 billion in revenue over the past 12 months, Penske Automotive Group is one of the larger companies in the consumer retail industry and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it’s harder to find incremental growth when you’ve penetrated most of the market. For Penske Automotive Group to boost its sales, it likely needs to adjust its prices or lean into foreign markets.
As you can see below, Penske Automotive Group grew its sales at a sluggish 4.2% compounded annual growth rate over the last three years (we compare to 2019 to normalize for COVID-19 impacts) as it barely increased sales at existing, established locations.
This quarter, Penske Automotive Group grew its revenue by 1.4% year on year, and its $7.7 billion of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and suggests its products will see some demand headwinds.
The 1999 book Gorilla Game predicted Microsoft and Apple would dominate tech before it happened. Its thesis? Identify the platform winners early. Today, enterprise software companies embedding generative AI are becoming the new gorillas. a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
Store Performance
Number of Stores
A retailer’s store count influences how much it can sell and how quickly revenue can grow.
Penske Automotive Group sported 358 locations in the latest quarter. Over the last two years, it has opened new stores quickly, averaging 2.7% annual growth. This was faster than the broader consumer retail sector.
When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.
Same-Store Sales
The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales gives us insight into this topic because it measures organic growth for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year.
Penske Automotive Group’s demand within its existing locations has been relatively stable over the last two years but was below most retailers. On average, the company’s same-store sales have grown by 1.4% per year. This performance suggests it should consider improving its foot traffic and efficiency before expanding its store base.
In the latest quarter, Penske Automotive Group’s same-store sales rose 5.1% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.
Key Takeaways from Penske Automotive Group’s Q3 Results
We were impressed by how significantly Penske Automotive Group blew past analysts’ same-store sales expectations this quarter. On the other hand, its EBITDA missed and its EPS fell short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter. The stock remained flat at $158.16 immediately following the results.
So do we think Penske Automotive Group is an attractive buy at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
