When Should You Buy Penske Automotive Group, Inc. (NYSE:PAG)?

Simply Wall St

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Penske Automotive Group, Inc. (NYSE:PAG), which is in the specialty retail business, and is based in United States, saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on Penske Automotive Group’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Penske Automotive Group

Is Penske Automotive Group still cheap?

Good news, investors! Penske Automotive Group is still a bargain right now. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Penske Automotive Group’s ratio of 8.64x is below its peer average of 14.94x, which suggests the stock is undervalued compared to the Specialty Retail industry. What’s more interesting is that, Penske Automotive Group’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Penske Automotive Group look like?

NYSE:PAG Past and Future Earnings, June 24th 2019

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted profit growth of 0.05% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Penske Automotive Group, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since PAG is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on PAG for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PAG. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Penske Automotive Group. You can find everything you need to know about Penske Automotive Group in the latest infographic research report. If you are no longer interested in Penske Automotive Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.