Penske Automotive (PAG): Strengthening U.S. Scale with Strategic Acquisitions

Penske Automotive Group Inc. (NYSE:PAG) is one of the best used-car stocks to buy, according to hedge funds. On January 26, Penske Automotive Group Inc. (NYSE:PAG) affirmed plans to expand its presence in Florida with the acquisition of two Lexus dealerships.

The company has inked an agreement to acquire Lexus of Orlando and Lexus of Winter Park in the Orlando metropolitan area of central Florida. With the acquisition, the company is poised to add $450 million in annualized revenue. It is to fund the acquisition using cash flow from operations and availability under its US credit agreement.

North American Operations Officer Rich Shearing said, “The acquisition of these premier Lexus dealerships represents another strategic addition to the Penske Automotive Group portfolio. The acquired dealerships will expand the Company’s scale in one of the fastest growing states in the country while leveraging the Company’s existing infrastructure in Central Florida.”

Earlier on January 9, Benchmark reiterated a Buy rating and a $190 price target on Penske Automotive Group. The positive stance comes despite analyst Michael Albanese making “modest reductions” to forecasts for new vehicle sales, aftersales, and G&A leverage for the automotive retailer. The research firm expects the company to deliver EBITDA of $341 million and earnings per share of $3.10 for Q4.

Penske Automotive Group, Inc. (NYSE:PAG) is a diversified international transportation services company that operates as one of the world’s premier automotive and commercial truck retailers. It sells new and used vehicles, provides maintenance and repair services, and offers financing and insurance products across the US, UK, Canada, Germany, Italy, and Japan.

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Disclosure: None. This article is originally published at Insider Monkey.