Why Penske Auto Group Stock Just Popped
Key Points
Analysts weren't optimistic about Penske this quarter, helping the automotive company to beat on sales and earnings.
Analysts expect continued earnings declines in 2026, followed by slow growth over the next several years.
Penske Auto Group (NYSE: PAG) stock is off to the races Wednesday morning, surging 11% through 11:11 a.m. ET after crushing on Q1 2026 earnings.
Heading into the report, analysts expected Penske to earn $2.88 per share on sales of $7.7 billion. Penske raced past those numbers, though, earning of $3.56 per share on sales of $7.9 billion.
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Penske Automotive Q1 earnings
Not all the news was great. Penske "beat" on sales, but sales still declined 1% year over year. It beat on earnings, too, but operating profit was down 12%, and net earnings fell 9%. (Earnings per share fell only 8%, thanks to Penske buying back shares.)
Retail sales volumes of new cars and commercial trucks declined 5% in the quarter, but the company partially offset this decline with higher prices and growth in service and parts revenue. As a result, same-store sales at the company's car dealerships grew 1%.
Earnings increased more strongly in the company's transportation (commercial truck leasing, rental, maintenance, and logistics) business -- up 24%.
What's next for Penske Automotive stock?
Penske did not provide guidance for how it expects the rest of this year to play out. For what it's worth, though, analysts who follow Penske are predicting continued improvement in results. Sales might hit $32 billion this year (up 4% year over year). And the decline in earnings should become less stark, with profits of $13.21 per share representing a decline of less than 1%.
Looking further out, analysts have Penske pegged to grow earnings about 5% to 6% annually over the next five years. That's not horrible. Still, despite the stock paying a 3.5% dividend yield, at a valuation of 11.5 times trailing earnings, Penske looks more like a hold than a buy to me.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Penske Automotive Group. The Motley Fool has a disclosure policy.