Penske Automotive (PAG) shares ended the last trading session 8.8% higher at $212. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 9% loss over the past four weeks.
Penske Automotive Group’s shares rose after it agreed to be taken private by its two biggest shareholders, Penske Corp and Japan’s Mitsui, in a deal valuing the company at about $16.3 billion including debt.
The key driver is the buyout price. At $212 per share, the offer is 8.6% above the closing price on July 21, the day before the proposal became public. Investors therefore bid the stock up toward that price, since they can now expect to receive it when the deal closes in the first quarter of 2027.
A small dividend increase to $1.46 per quarter added to the positive mood, while the upcoming Oct. 28 earnings report kept attention on the stock.
This auto dealership chain is expected to post quarterly earnings of $3.47 per share in its upcoming report, which represents a year-over-year change of +7.4%. Revenues are expected to be $8.06 billion, up 4.7% from the year-ago quarter.
Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.
For Penske, the consensus EPS estimate for the quarter has been revised 3.9% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on PAG going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Penske belongs to the Zacks Automotive - Retail and Whole Sales industry. Another stock from the same industry, AutoNation (AN), closed the last trading session 4.3% higher at $159.8. Over the past month, AN has returned -21.6%.
AutoNation's consensus EPS estimate for the upcoming report has changed -2.9% over the past month to $5.49. Compared to the company's year-ago EPS, this represents a change of +9.6%. AutoNation currently boasts a Zacks Rank of #4 (Sell).
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Penske Automotive Group, Inc. (PAG): Free Stock Analysis Report
AutoNation, Inc. (AN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).