Penske Automotive Group (PAG) has drawn investor attention following recent trading, with the stock most recently closing at $158.79. This price corresponds to a 1-year total return decline of 2.8%.

That 1-year total shareholder return of a 2.8% decline contrasts with a stronger three- and five-year picture, where total shareholder returns of 27.05% and 169.93% suggest longer term holders have still seen meaningful gains. Recent share price moves around $158.79 hint at more muted momentum.

If Penske Automotive Group has you looking across the auto space, this could be a useful moment to scan other auto manufacturers for potential ideas.

With PAG trading at $158.79 and sitting at a discount to both analyst targets and one intrinsic value estimate, the key question is whether the market is overlooking its potential or already pricing in future growth.

Most Popular Narrative: 11.9% Undervalued

At $158.79, Penske Automotive Group sits below the most followed fair value estimate of $180.33, which is built on detailed revenue, margin and valuation assumptions.

Record growth in service and parts revenue (+7%) and gross profit (+9%) is being driven by the aging vehicle fleet (average age now over 6 years), increased vehicle complexity, and higher warranty and customer-pay work. This creates durable, recurring revenue streams and supports expanding net margins as the average vehicle age rises in both the U.S. and Europe.

Want to see what this recurring revenue story implies for future earnings per share, margins and valuation multiples? The narrative relies on specific growth, profitability and discount rate assumptions that may be unexpected. The full set of numbers sits behind that fair value tag.

Result: Fair Value of $180.33 (UNDERVALUED)

However, the earnings story could look very different if luxury demand softens or if electric vehicles and direct sales reduce dealership margins faster than expected.

Build Your Own Penske Automotive Group Narrative

If this viewpoint does not quite fit with how you see Penske Automotive Group, you can stress test the assumptions, adjust the inputs, and build your own narrative in just a few minutes with Do it your way.

A great starting point for your Penske Automotive Group research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.