Penske Automotive stock surges 7% on earnings beat

Investing.com -- Penske Automotive Group (NYSE: PAG) shares jumped 7% after the company reported first-quarter fiscal 2026 results that exceeded Wall Street expectations.

The automotive retailer posted adjusted earnings per share of $3.05, surpassing the consensus estimate of $2.92. Revenue reached $7.86 billion, beating analyst projections of $7.50 billion.

The company's gross margin came in at 16.5% for the quarter. Gross profit per unit increased for both new and used vehicles and rose sequentially from the fourth quarter. The adjusted SG&A to gross profit ratio of 73.3% came in better than the 75.0% estimate. Overall, adjusted operating income totaled $302 million, above the forecast of $268 million.

Barclays analysts noted that "revenue of $7.86bn was 4.8% above our $7.50bn estimate and gross margin was also slightly favorable at 16.5% vs. our 16.4% estimate. Gross profit per unit (GPU) was higher for both New and Used vehicles and also up sequentially from 4Q."

The analysts added that "interest expense was modestly favorable and equity income associated with Penske Transportation Solutions (PTS) was above our forecast. The tax rate of 27.3% compared with our 26.5% estimate."

During the first quarter, Penske Automotive acquired two Lexus dealerships with $450 million in annualized revenue. The company also increased its dividend by 1.4% and repurchased 170,000 shares for $26.4 million at approximately $155 per share.

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