Penske Automotive Group, Inc. (NYSE:PAG) recently increased its quarterly dividend by 7% following strong performance and cash generation. The first fruits of the increased dividend were harvested on June 3. This will serve as a motivation to the shareholders of the company, given the fact that its performance remains flat so far this year.
Meanwhile, Sonic Automotive Inc (NYSE:SAH), which is expected to announce its second quarter results on July 23, inked a three-year, multimillion dollar agreement with Lextech for mobile app development to help the company better engage with customers from the moment they step into a dealership.
This should boost customer service delivery for the company, thereby enhancing loyalty. Sonic Automotive Inc (NYSE:SAH) has more than 100 auto dealerships in 15 states. Analysts expect the company to report second quarter earnings of $0.52 per share.
Performance and valuation
AutoNation, Inc. (NYSE:AN)’s most recent quarter revenues grew by 12% year-over-year. This compares to Group 1 Automotive, Inc. (NYSE:GPI)’s 18% growth, and Penske Automotive Group, Inc. (NYSE:PAG) and Sonic Automotive Inc (NYSE:SAH)’s 8% each. AutoNation’s gross margin slightly beats its rivals’ at 16%, while the trio of competitors has 15% each. The same is replicated in the operating margin, with AutoNation posting 4%, compared to trio’s 3% each.
AutoNation’s price to earnings, or P/E, ratio of 17.15 times compared to Group 1’s 15.97, Penske Automotive Group, Inc. (NYSE:PAG)’s 14.19 and Sonic’s 13.43 demonstrates that investors are placing more value on its shares over the rivals’. This is based on its strong fundamentals and bright outlook.
The bottom line
AutoNation, America’s largest Auto retailer, has the best fundamentals among its rivals. The booming U.S. auto industry guarantees continued revenue growth for the Fort Lauderdale, Florida-based retailer.
Investors also seem to have noticed this as they already value the company highly compared to rivals. This auto retailer offers investors the best option in investing in the auto retail business in the anticipation of a continued boom in the overall industry.
Nicholas Kitonyi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Nicholas is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article This Auto Retailer Is Riding the Auto Industry Boom originally appeared on Fool.com is written by Nicholas Kitonyi.
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