Head to Head Review: Penske Automotive Group (PAG) and Rush Enterprises (RUSHB)

Penske Automotive Group (NYSE:PAG) and Rush Enterprises (NASDAQ:RUSHB) are both retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, analyst recommendations, profitability, institutional ownership and valuation.

Profitability

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

Net Margins Return on Equity Return on Assets
Penske Automotive Group 3.09% 17.76% 4.21%
Rush Enterprises 3.83% 12.85% 4.52%

Valuation & Earnings

This table compares Penske Automotive Group and Rush Enterprises’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Penske Automotive Group $21.39 billion 0.17 $613.30 million $4.31 9.73
Rush Enterprises $4.71 billion 0.29 $172.12 million N/A N/A

Penske Automotive Group has higher revenue and earnings than Rush Enterprises.

Insider & Institutional Ownership

43.1% of Penske Automotive Group shares are held by institutional investors. Comparatively, 9.0% of Rush Enterprises shares are held by institutional investors. 40.7% of Penske Automotive Group shares are held by company insiders. Comparatively, 13.9% of Rush Enterprises shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Penske Automotive Group and Rush Enterprises, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Penske Automotive Group 0 1 3 0 2.75
Rush Enterprises 0 0 0 0 N/A

Penske Automotive Group presently has a consensus target price of $58.00, indicating a potential upside of 38.36%. Given Penske Automotive Group’s higher possible upside, research analysts clearly believe Penske Automotive Group is more favorable than Rush Enterprises.

Volatility & Risk

Penske Automotive Group has a beta of 1.44, indicating that its share price is 44% more volatile than the S&P 500. Comparatively, Rush Enterprises has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500.

Dividends

Penske Automotive Group pays an annual dividend of $1.48 per share and has a dividend yield of 3.5%. Rush Enterprises pays an annual dividend of $0.48 per share and has a dividend yield of 1.4%. Penske Automotive Group pays out 34.3% of its earnings in the form of a dividend. Penske Automotive Group has increased its dividend for 7 consecutive years. Penske Automotive Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Penske Automotive Group beats Rush Enterprises on 10 of the 15 factors compared between the two stocks.

Penske Automotive Group Company Profile

Penske Automotive Group, Inc. operates as a transportation services company. The company operates through four segments: Retail Automotive, Retail Commercial Truck, Other, and Non-Automotive Investments. It 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 primarily in Australia and New Zealand. The company engages in the sale of new and used motor vehicles of approximately 40 brands; and provision of vehicle services and collision repair services. In addition, it is involved in the sale and placement of third-party finance and insurance products, third-party extended service and maintenance contracts, and replacement and aftermarket automotive products. Further, the company distributes commercial vehicles and parts to a network of approximately 70 dealership locations, including 8 company-owned retail commercial vehicle dealerships. As of December 31, 2017, it operated 343 automotive retail franchises, of which 155 franchises are located in the United States; and 188 franchises are located outside of the United States primarily in the United Kingdom. The company also operated 20 dealerships locations of heavy and medium duty trucks, offering primarily Freightliner and Western Star branded trucks, as well as a range of used trucks, and services and parts. Penske Automotive Group, Inc. is headquartered in Bloomfield Hills, Michigan.

Rush Enterprises Company Profile

Rush Enterprises, Inc., through its subsidiaries, operates as an integrated retailer of commercial vehicles and related services in the United States. The company operates a network of commercial vehicle dealerships under the Rush Truck Centers name. Its Rush Truck Centers primarily sell commercial vehicles manufactured by Peterbilt, International, Hino, Ford, Isuzu, Mitsubishi Fuso, IC Bus, or Blue Bird; provides new and used commercial vehicles, and aftermarket parts, as well as service and repair, financing, and leasing and rental services; and offers property and casualty insurance, including collision and liability insurance on commercial vehicles, cargo insurance, and credit life insurance to its commercial vehicle customers. The company also offers equipment installation and repair, parts installation, and paint and body repair services; new vehicle pre-delivery inspection, truck modification, and natural gas fuel system installation services; and body, chassis upfit, and component installation services, as well as sells tires for use on commercial vehicles. It serves regional and national truck fleets, corporations, local governments, and owner operators. The company operates a network of centers located in the states of Alabama, Arizona, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Missouri, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Tennessee, Texas, Utah, and Virginia. Rush Enterprises, Inc. was founded in 1965 and is headquartered in New Braunfels, Texas.

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