Contrasting TravelCenters of America (TA) & Penske Automotive Group (PAG)

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

Risk & Volatility

TravelCenters of America has a beta of 1.68, indicating that its share price is 68% more volatile than the S&P 500. Comparatively, Penske Automotive Group has a beta of 1.49, indicating that its share price is 49% more volatile than the S&P 500.



Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TravelCenters of America 0 1 2 0 2.67
Penske Automotive Group 0 3 5 0 2.63

TravelCenters of America currently has a consensus target price of $7.67, indicating a potential upside of 143.39%. Penske Automotive Group has a consensus target price of $55.29, indicating a potential upside of 16.78%. Given TravelCenters of America’s stronger consensus rating and higher probable upside, research analysts plainly believe TravelCenters of America is more favorable than Penske Automotive Group.

Dividends

Penske Automotive Group pays an annual dividend of $1.36 per share and has a dividend yield of 2.9%. TravelCenters of America does not pay a dividend. Penske Automotive Group pays out 31.6% of its earnings in the form of a dividend. Penske Automotive Group has increased its dividend for 7 consecutive years.

Institutional & Insider Ownership

32.1% of TravelCenters of America shares are owned by institutional investors. Comparatively, 43.2% of Penske Automotive Group shares are owned by institutional investors. 3.8% of TravelCenters of America shares are owned by company insiders. Comparatively, 41.6% of Penske Automotive Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares TravelCenters of America and Penske Automotive Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TravelCenters of America $6.05 billion 0.02 $9.26 million ($0.30) -10.50
Penske Automotive Group $21.39 billion 0.19 $613.30 million $4.31 10.98

Penske Automotive Group has higher revenue and earnings than TravelCenters of America. TravelCenters of America 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 TravelCenters of America and Penske Automotive Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TravelCenters of America 0.46% -5.55% -1.89%
Penske Automotive Group 2.90% 17.56% 3.84%

Summary

Penske Automotive Group beats TravelCenters of America on 13 of the 17 factors compared between the two stocks.

About TravelCenters of America

TravelCenters of America LLC operates travel centers and convenience stores in the United States and Canada. It operates in two segments, Travel Centers and Convenience Stores. Its travel centers offer a range of products and services, including diesel fuel and gasoline, as well as nonfuel products and services, such as truck repair and maintenance services, full service restaurants, quick service restaurants (QSR), and various customer amenities. As of December 31, 2017, it operated 256 travel centers under the TravelCenters of America, TA, Petro Stopping Centers, and Petro brand names. The company's convenience stores offer gasoline, as well as various nonfuel products and services, including coffee, groceries, and fresh foods, as well as a QSR and/or car wash. As of December 31, 2017, the company operated 233 convenience stores under the Minit Mart brand name. The company serves trucking fleets and their drivers, independent truck drivers, highway and local motorists, and casual diners. TravelCenters of America LLC was founded in 1992 and is headquartered in Westlake, Ohio.

About Penske Automotive Group

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.

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