Penske Automotive Group (PAG)
Penske Automotive Group (PAG): Low Price to Sales RatioBy J. Royden Ward, Chief Analyst, Cabot Benjamin Graham Value Investor
From Cabot Wealth Advisory August 25, 2015 Sign up for Cabot Wealth Advisory—it's free!
Low Price to Sales Ratio is an easy way to calculate ratio that provides an excellent indication of whether your stock choice is undervalued or overvalued. Divide the current stock price by the latest four quarters of sales per share (total sales divided by common shares outstanding). A price to sales ratios less than 1.00 provides a good indication that your stock is undervalued.
Penske Automotive Group (PAG) possesses an ultra-low price to sales ratio, yet the company’s sales and earnings are set to accelerate during the next several quarters. Penske operates automotive and commercial truck dealerships, and distributes commercial vehicles, diesel and gas engines, power systems, and parts and services. Penske offers 40 different brands of vehicles in 180 automotive retail franchised dealerships in the U.S. and 148 franchises outside the U.S., primarily in the U.K.
The boom in car and pickup truck sales in the U.S. and the U.K. will likely continue during the next several years. PAG shares sell at just 0.25 times sales and 14.1 times current EPS with a dividend yield of 2.1%. The company’s board of directors has boosted the quarterly dividend every quarter for 18 consecutive quarters. I expect PAG’s stock price to advance 36% to my Min Sell Price of 66.81 within one year. Buy at the current price.
I will continue to follow PAG, as well as many other undervalued, high-quality companies in my Cabot Benjamin Graham Value Investor. For more information on how to subscribe, click here.
|Penske Automotive Group (PAG)
2555 Telegraph Road
Bloomfield Hills, MI 48302
|Index Membership: N/A
Industry: Auto Dealerships
Full Time Employees: 22,000