Value
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.4 |
| P/S | 10.0 |
| EV/EBITDA | 3.0 |
| Fwd P/E | 8.8 |
| PEG | 4.2 |
| Analyst target | 3.0 |
- ▸Forward P/E: 12.5x
- ▸PEG: 2.27
PAG · Why this verdict
Why Penske Automotive Group (PAG) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.2/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
A Piotroski F-Score of 2 out of 9 is near the minimum possible reading, indicating widespread deterioration across profitability, leverage, and operating efficiency metrics, placing this business in the bottom quality tier. Quality breakdown | Piotroski F-Score improves to 5 or above within 4 reporting periods as operating metrics recover. | →Stable |
| CounterAuto dealerships often show weak Piotroski scores due to negative working capital dynamics and high inventory financing; the score may structurally understate dealership financial health relative to cash generation. | ||
RSI at 77 combined with falling on-balance volume and the stock near its 52-week high represents a late-cycle distribution pattern where price is elevated but institutional selling is already underway. Momentum breakdown | RSI falls below 55 and price holds within 10% of current levels, confirming a healthy consolidation rather than a reversal. | →Stable |
| CounterStocks with RSI at 77 in uptrends can remain extended for months; the overbought signal is not a timing tool and the distribution pattern may be temporary sector rotation rather than sustained selling. | ||
Revenue declined approximately 1% year-over-year and earnings growth is effectively flat at 0.4 out of 10, while free cash flow converts at only 24% of net income, suggesting the business is generating little incremental value at current operating levels. Growth breakdown | Revenue returns to positive growth year-over-year within 2 quarterly reports and free cash flow conversion improves above 60%. | →Stable |
| CounterAuto dealership revenue depends heavily on new vehicle supply constraints that are cyclical; any normalization of new vehicle inventory could trigger revenue recovery without operational changes. | ||
Short interest of 14% of float reflects significant bearish positioning from investors who believe current price levels are unsustainable given the fundamental quality concerns and declining growth profile. Key risks | Short interest falls below 8% of float within 6 months as fundamental improvement reduces bearish conviction. | →Stable |
| CounterPenske's analyst coverage is described as light at 10 analysts with limited signal dampening; the short interest may reflect a small number of concentrated bearish positions rather than a broad consensus view. | ||
A Piotroski F-Score of 2 out of 9 is near the minimum possible reading, indicating widespread deterioration across profitability, leverage, and operating efficiency metrics, placing this business in the bottom quality tier.
→StableQuality breakdown
- Expectation
- Piotroski F-Score improves to 5 or above within 4 reporting periods as operating metrics recover.
CounterAuto dealerships often show weak Piotroski scores due to negative working capital dynamics and high inventory financing; the score may structurally understate dealership financial health relative to cash generation.
RSI at 77 combined with falling on-balance volume and the stock near its 52-week high represents a late-cycle distribution pattern where price is elevated but institutional selling is already underway.
→StableMomentum breakdown
- Expectation
- RSI falls below 55 and price holds within 10% of current levels, confirming a healthy consolidation rather than a reversal.
CounterStocks with RSI at 77 in uptrends can remain extended for months; the overbought signal is not a timing tool and the distribution pattern may be temporary sector rotation rather than sustained selling.
Revenue declined approximately 1% year-over-year and earnings growth is effectively flat at 0.4 out of 10, while free cash flow converts at only 24% of net income, suggesting the business is generating little incremental value at current operating levels.
→StableGrowth breakdown
- Expectation
- Revenue returns to positive growth year-over-year within 2 quarterly reports and free cash flow conversion improves above 60%.
CounterAuto dealership revenue depends heavily on new vehicle supply constraints that are cyclical; any normalization of new vehicle inventory could trigger revenue recovery without operational changes.
Short interest of 14% of float reflects significant bearish positioning from investors who believe current price levels are unsustainable given the fundamental quality concerns and declining growth profile.
→StableKey risks
- Expectation
- Short interest falls below 8% of float within 6 months as fundamental improvement reduces bearish conviction.
CounterPenske's analyst coverage is described as light at 10 analysts with limited signal dampening; the short interest may reflect a small number of concentrated bearish positions rather than a broad consensus view.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Penske Automotive trades at a forward price-to-earnings ratio of 12.5x with a Piotroski F-Score of only 2 out of 9 and below-floor quality score of 2.5, indicating weak fundamental health, while RSI at 77 and the stock at a 52-week high suggest the technical setup is overbought at a point of limited further analyst-supported upside.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.5 |
| ROA | 2.9 |
| Gross margin | 0.0 |
| Op margin | 1.5 |
| Net margin | 1.4 |
| Current ratio | 3.9 |
| FCF quality | 1.9 |
| Moat | 3.6 |
| Piotroski F | 2.2 |
- ▸Earnings quality RED FLAG: 24% FCF/NI
- ▸No competitive moat
- ▸Weak Piotroski F-Score: 2/9
- ▸Quality concerns
Growth
1.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.2 |
| EPS growth | 0.4 |
- ▸Declining revenue: -1%
Momentum
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 3.2 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.0 |
| Price target | 5.1 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (10.0) — signal dampened
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider selling — $495,808 (0.004% of mkt cap)
Peer rank
4.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.9 |
| quality rank | 5.6 |
| growth rank | 2.9 |
Technical
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.9 |
| support resistance | 1.9 |
| 52w position | 9.7 |
Risk (lower is worse)
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 2.8 |
| days to cover | 1.2 |
| volatility | 5.6 |
| put call | 0.0 |
| implied vol | 5.7 |
| max pain risk | 3.0 |
| beta | 7.8 |
| debt equity | 3.7 |
- ▸Elevated put/call: 5.33
- ▸Above max pain $145
Catalyst
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 2.4 |
| dividend safety | 7.0 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend: 317.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (7)
- MOMENTUM:5.3>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:24d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.6=NEGATIVE
Warning (1)
- MOMENTUM:5.3<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-1.61
Upside
-12.4%
Downside
7.7%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 6.1 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:-1.6=NEGATIVE.
The strongest dimensions are Value at 6.1, Sentiment at 5.8, and Momentum at 5.3; the weakest are Growth at 1.3, Quality at 2.5, and Risk (lower is worse) at 3.7. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -1.61 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Critically Weak Piotroski Quality
Trip ifPiotroski F-Score remains below 3 for 4 consecutive reporting periods.
- P2Overbought Rsi Late Cycle Risk
Trip ifRSI falls below 40 and price drops below $155, a decline of more than 13% from the current level.
- P3Declining Revenue And Earnings Stagnation
Trip ifRevenue declines by more than 5% year-over-year for 2 consecutive quarters.
- P4High Short Interest Skepticism
Trip ifShort interest rises above 20% of float.