On Wednesday, Penske Automotive Group (NYSE:PAG) announced second-quarter earnings that surpassed analyst predictions, fueled by strong results in its service and parts segment despite flat overall revenue.
The global transportation services provider reported earnings of $3.78 per share for the quarter, topping the analyst consensus of $3.59 by $0.19.
Revenue held steady at $7.7 billion compared to the same quarter last year, missing the $7.92 billion estimate. Net income attributable to common shareholders rose 4% to $250 million from $241.2 million in the prior-year period.
The company’s solid performance was supported by record gross profit, which increased 3% to $1.3 billion, with an overall gross margin improvement of 50 basis points to 16.9%.
Retail automotive service and parts revenue stood out, growing 8% to a record high, with related gross profit increasing 9%.
“I am pleased with the performance of our diversified international transportation services business in the second quarter,” said Chair Roger Penske.
“The second quarter represented the third consecutive quarter of year-over-year earnings growth driven by an overall gross margin increase of 50 basis points, an increase of 50 basis points in retail automotive service and parts gross margin, and a 30-basis point improvement in selling, general and administrative expenses as a percentage of gross profit.”
Retail automotive same-store revenue declined 1% year-over-year, with new vehicle sales down 2%, used vehicle sales down 1%, and finance and insurance revenue falling 2%.
However, same-store gross profit increased 3%, buoyed by an 8% rise in used vehicle gross profit and a 9% boost in service and parts gross profit, which offset a 4% drop in new vehicle gross profit.
Penske’s retail commercial truck segment recorded a 2% rise in unit sales and a 6% increase in revenue to $943.6 million.
Earnings from the company’s investment in Penske Transportation Solutions grew slightly to $53.5 million, up from $52.9 million a year ago.
During the quarter, Penske repurchased 630,000 shares, bringing total buybacks to 885,000 shares year-to-date.
Penske Automotive Group stock price
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