PAG
Penske Automotive Group, Inc.
$164.73
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 158.2% above fair value
You pay
$164.73
Bear
$29.89
Fair
$63.80
Bull
$102.79
Bear
$29.89
-81.9%
3% stage 1 growth, 11% discount
Fair
$63.80
-61.3%
4% stage 1 growth, 11% discount
Bull
$102.79
-37.6%
5% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (4% base case)
Terminal Value % of EV
34%
Implied Market Multiple
26.5x
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $180.00 from 26 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $63.80 per share.
Warnings
Wall Street's average price target is $180.00 (from 26 analysts). Our estimate is 86% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions