PAG
Penske Automotive Group, Inc.
$202.66
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 241.3% above fair value
You pay
$202.66
Bear
$44.03
Fair
$59.37
Bull
$102.20
Bear
$44.03
-78.3%
3% stage 1 growth, 11% discount
Fair
$59.37
-70.7%
3% stage 1 growth, 11% discount
Bull
$102.20
-49.6%
4% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (3% base case)
Terminal Value % of EV
33%
Implied Market Multiple
29.8x
Market is pricing in (growth)
14.3%
vs 3.4% base
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 $190.00 from 27 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $59.37 per share.
Warnings
Wall Street's average price target is $190.00 (from 27 analysts). Our estimate is 92% 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