Penske Automotive Group Inc. Common Stock (PAG)

FairStock Score: 63/100 — STEADY

Key Financials

Strengths

• Generates $303 million in annual free cash flow (2.9% yield on market cap)
• Solid return on equity of 17.1% above cost of capital
• Attractive 3.5% dividend yield providing steady income returns
• Established organization with 27,700 employees providing operational scale

Concerns

• Altman Z-Score of 1.5 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Penske Automotive Group Inc. Common Stock is a mid-cap consumer cyclical company valued at $10.5 billion. The business generates $31.8 billion in annual revenue with a 0.6% net margin and $303 million in free cash flow. From a quality standpoint, Penske shows solid Piotroski F-Score of 6/9 and distressed Altman Z-Score of 1.5 warrants caution. On valuation, the stock is attractively valued at 11.3x earnings, with a modest 2% margin of safety vs Graham Number. Growth dynamics show revenue growing at 14.6% and profit growth of -3.5%. The 3.5% dividend yield adds an income component for patient holders. Our composite FairStock Score of 63/100 reflects above-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

The market underappreciates Penske's consistent 17% ROE at just 11x earnings—a re-rating toward sector peers could unlock 30-50% upside. With $303 million in annual free cash flow (2.9% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the consumer cyclical space. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer