Research Alert: Pag: Earnings Exceed Expectations Despite Challenging Backdrop

-- CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

Penske Automotive (PAG) posted Q1 adjusted EPS of $3.05 vs. $3.59 (-15%), ahead of the $2.88 consensus. The beat was driven by a stronger-than-expected top line, as revenue fell 1.1% to $7.86B ($150M ahead of consensus) and gross margin contracted 10 bps to 16.5% (10 bps short of consensus). Lower volumes drove the revenue decline, as vehicles sold fell 2.8% to 123,173 units. Notably, currency provided a meaningful revenue tailwind (~$228M), benefiting from PAG's international exposure, particularly in the U.K. (~30% of total revenue). PAG repurchased 170K shares for $26.4M in Q1 (~1.8% of total outstanding shares). Management also closed on the acquisition of dealerships expected to add $450M in annualized revenue in February. In our view, this was a solid release, as PAG's earnings exceeded expectations despite a difficult backdrop for auto dealerships. The stock traded 3% higher in pre-market trading. PAG's higher non-U.S. exposure relative to other major U.S.-based auto dealerships helped boost results.