Analyzing Asbury Automotive Group (ABG) & Penske Automotive Group (PAG)

Asbury Automotive Group (NYSE: ABG) and Penske Automotive Group (NYSE:PAG) are both retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, institutional ownership, analyst recommendations, risk and profitabiliy.

Earnings & Valuation

This table compares Asbury Automotive Group and Penske Automotive Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Asbury Automotive Group $6.53 billion 0.19 $329.40 million $7.81 7.39
Penske Automotive Group $20.38 billion 0.19 $672.30 million $4.06 10.82

Penske Automotive Group has higher revenue and earnings than Asbury Automotive Group. Asbury Automotive Group is trading at a lower price-to-earnings ratio than Penske Automotive Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Asbury Automotive Group and Penske Automotive Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Asbury Automotive Group 2.61% 52.23% 5.83%
Penske Automotive Group 1.70% 19.06% 3.93%

Dividends

Penske Automotive Group pays an annual dividend of $1.24 per share and has a dividend yield of 2.8%. Asbury Automotive Group does not pay a dividend. Penske Automotive Group pays out 30.5% of its earnings in the form of a dividend. Asbury Automotive Group has increased its dividend for 6 consecutive years.

Insider & Institutional Ownership

99.9% of Asbury Automotive Group shares are owned by institutional investors. Comparatively, 39.8% of Penske Automotive Group shares are owned by institutional investors. 11.9% of Asbury Automotive Group shares are owned by insiders. Comparatively, 40.7% of Penske Automotive Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility & Risk

Asbury Automotive Group has a beta of 1.33, indicating that its stock price is 33% more volatile than the S&P 500. Comparatively, Penske Automotive Group has a beta of 1.37, indicating that its stock price is 37% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Asbury Automotive Group and Penske Automotive Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Asbury Automotive Group 1 2 0 0 1.67
Penske Automotive Group 1 2 3 0 2.33

Asbury Automotive Group currently has a consensus target price of $63.00, suggesting a potential upside of 9.09%. Penske Automotive Group has a consensus target price of $55.00, suggesting a potential upside of 25.17%. Given Penske Automotive Group’s stronger consensus rating and higher possible upside, analysts clearly believe Penske Automotive Group is more favorable than Asbury Automotive Group.

Summary

Penske Automotive Group beats Asbury Automotive Group on 9 of the 17 factors compared between the two stocks.

About Asbury Automotive Group

Asbury Automotive Group, Inc. is an automotive retailer in the United States. As of December 31, 2016, the Company owned and operated 93 new vehicle franchises, representing 28 brands of automobiles at 77 dealership locations, and 23 collision centers in the United States. In addition, as of December 31, 2016, it owned and operated two standalone used vehicle stores in Florida. Its stores offer automotive products and services, including new and used vehicles; parts and service, including vehicle repair and maintenance services, replacement parts, and collision repair services; and finance and insurance products, including arranging vehicle financing through third parties and aftermarket products, such as extended service contracts, guaranteed asset protection (GAP) insurance, prepaid maintenance, and credit life and disability insurance. Its new vehicle revenues include new vehicle sales and lease transactions arranged by dealerships with third-party financial institutions.

About Penske Automotive Group

Penske Automotive Group, Inc. is an international transportation services company. The Company operates automotive and commercial truck dealerships principally in the United States, Canada and Western Europe, and distributes commercial vehicles, diesel engines, gas engines, power systems, and related parts and services principally in Australia and New Zealand. The Company’s segments include Retail Automotive, consisting of its retail automotive dealership operations; Retail Commercial Truck, consisting of its retail commercial truck dealership operations in the United States and Canada; Other, consisting of its commercial vehicle and power systems distribution operations and other non-automotive consolidated operations, and Non-Automotive Investments, consisting of its equity method investments in non-automotive operations. The Company holds interests in Penske Truck Leasing Co., L.P. (PTL), a provider of transportation services and supply chain management.

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