AutoNation (NYSE: AN) and Penske Automotive Group (NYSE:PAG) are both mid-cap retail/wholesale companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, profitabiliy, earnings, institutional ownership, valuation and dividends.

Risk and Volatility

AutoNation has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500. Comparatively, Penske Automotive Group has a beta of 1.49, meaning that its share price is 49% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for AutoNation and Penske Automotive Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AutoNation 0 8 3 0 2.27
Penske Automotive Group 1 3 3 0 2.29

AutoNation currently has a consensus price target of $48.38, suggesting a potential upside of 14.01%. Penske Automotive Group has a consensus price target of $53.20, suggesting a potential upside of 19.63%. Given Penske Automotive Group’s stronger consensus rating and higher probable upside, analysts plainly believe Penske Automotive Group is more favorable than AutoNation.

Dividends

Penske Automotive Group pays an annual dividend of $1.24 per share and has a dividend yield of 2.8%. AutoNation does not pay a dividend. Penske Automotive Group pays out 30.5% of its earnings in the form of a dividend. AutoNation has raised its dividend for 6 consecutive years.

Insider & Institutional Ownership

66.1% of AutoNation shares are owned by institutional investors. Comparatively, 39.0% of Penske Automotive Group shares are owned by institutional investors. 3.1% of AutoNation shares are owned by company insiders. Comparatively, 40.7% of Penske Automotive Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares AutoNation and Penske Automotive Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
AutoNation $21.63 billion 0.20 $958.10 million $4.24 10.01
Penske Automotive Group $20.38 billion 0.19 $672.30 million $4.06 10.95

AutoNation has higher revenue and earnings than Penske Automotive Group. AutoNation is trading at a lower price-to-earnings ratio than Penske Automotive Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares AutoNation and Penske Automotive Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AutoNation 2.00% 18.40% 4.24%
Penske Automotive Group 1.70% 19.06% 3.93%

Summary

AutoNation beats Penske Automotive Group on 9 of the 16 factors compared between the two stocks.

About AutoNation

AutoNation, Inc. (AutoNation) is an automotive retailer in the United States. The Company offers a range of automotive products and services, including new vehicles, used vehicles, parts and service, which includes automotive repair and maintenance services, as well as wholesale parts and collision businesses, and automotive finance and insurance products, including vehicle service and other protection products, as well as the arranging of financing for vehicle purchases through third-party finance sources. It operates through three segments: Domestic, Import and Premium Luxury. Its Domestic segment consists of retail automotive franchises that sell new vehicles manufactured by General Motors, Ford and FCA US. The Import segment consists of retail automotive franchises that sell new vehicles manufactured primarily by Toyota, Honda and Nissan. The Premium Luxury segment consists of retail automotive franchises that sell new vehicles manufactured by Mercedes-Benz, BMW, Audi and Lexus.

About Penske Automotive Group

Penske Automotive Group, Inc. is an international transportation services company. The Company operates automotive and commercial truck dealerships principally in the United States, Canada and Western Europe, and distributes commercial vehicles, diesel engines, gas engines, power systems, and related parts and services principally in Australia and New Zealand. The Company’s segments include Retail Automotive, consisting of its retail automotive dealership operations; Retail Commercial Truck, consisting of its retail commercial truck dealership operations in the United States and Canada; Other, consisting of its commercial vehicle and power systems distribution operations and other non-automotive consolidated operations, and Non-Automotive Investments, consisting of its equity method investments in non-automotive operations. The Company holds interests in Penske Truck Leasing Co., L.P. (PTL), a provider of transportation services and supply chain management.

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