Comparing Penske Automotive Group (PAG) & Bed Bath & Beyond (BBBY)

Bed Bath & Beyond (NASDAQ: BBBY) and Penske Automotive Group (NYSE:PAG) are both mid-cap retail/wholesale companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, profitability, institutional ownership, earnings and risk.

Profitability

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This table compares Bed Bath & Beyond and Penske Automotive Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bed Bath & Beyond 4.11% 19.07% 7.48%
Penske Automotive Group 2.87% 17.67% 3.74%

Earnings and Valuation

This table compares Bed Bath & Beyond 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
Bed Bath & Beyond $12.22 billion 0.25 $685.10 million $3.48 6.12
Penske Automotive Group $21.39 billion 0.17 $613.30 million $7.14 6.03

Bed Bath & Beyond has higher earnings, but lower revenue than Penske Automotive Group. Penske Automotive Group is trading at a lower price-to-earnings ratio than Bed Bath & Beyond, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

91.3% of Bed Bath & Beyond shares are owned by institutional investors. Comparatively, 41.3% of Penske Automotive Group shares are owned by institutional investors. 5.0% of Bed Bath & Beyond shares are owned by company insiders. Comparatively, 40.7% of Penske Automotive Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current recommendations for Bed Bath & Beyond and Penske Automotive Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bed Bath & Beyond 8 12 1 0 1.67
Penske Automotive Group 0 3 4 0 2.57

Bed Bath & Beyond presently has a consensus target price of $25.39, suggesting a potential upside of 19.21%. Penske Automotive Group has a consensus target price of $56.17, suggesting a potential upside of 30.50%. Given Penske Automotive Group’s stronger consensus rating and higher possible upside, analysts plainly believe Penske Automotive Group is more favorable than Bed Bath & Beyond.

Risk & Volatility

Bed Bath & Beyond has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500. Comparatively, Penske Automotive Group has a beta of 1.52, meaning that its stock price is 52% more volatile than the S&P 500.

Dividends

Bed Bath & Beyond pays an annual dividend of $0.60 per share and has a dividend yield of 2.8%. Penske Automotive Group pays an annual dividend of $1.36 per share and has a dividend yield of 3.2%. Bed Bath & Beyond pays out 17.2% of its earnings in the form of a dividend. Penske Automotive Group pays out 19.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Bed Bath & Beyond has raised its dividend for 7 consecutive years.

Summary

Bed Bath & Beyond beats Penske Automotive Group on 9 of the 17 factors compared between the two stocks.

About Bed Bath & Beyond

Bed Bath & Beyond Inc. is a retailer, which operates under the names Bed Bath & Beyond (BBB), Christmas Tree Shops, Christmas Tree Shops andThat! or andThat! (collectively, CTS), Harmon or Harmon Face Values (collectively, Harmon), buybuy BABY (Baby) and World Market, Cost Plus World Market or Cost Plus (collectively, Cost Plus World Market). The Company operates in two segments: North American Retail and Institutional Sales. The Company sells a range of domestics merchandise and home furnishings. Domestics merchandise includes categories, such as bed linens and related items, bath items and kitchen textiles. Home furnishings include categories, such as kitchen and tabletop items, fine tabletop, basic housewares, general home furnishings, consumables and juvenile products. The Company operates approximately 1,530 stores plus its various Websites, other interactive platforms and distribution facilities.

About Penske Automotive Group

Penske Automotive Group, Inc. is an international transportation services company. The Company 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 principally in Australia and New Zealand. The Company’s segments include Retail Automotive, consisting of its retail automotive dealership operations; Retail Commercial Truck, consisting of its retail commercial truck dealership operations in the United States and Canada; Other, consisting of its commercial vehicle and power systems distribution operations and other non-automotive consolidated operations, and Non-Automotive Investments, consisting of its equity method investments in non-automotive operations. The Company holds interests in Penske Truck Leasing Co., L.P. (PTL), a provider of transportation services and supply chain management.

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