Sonic Automotive (NYSE:SAH) Issues Quarterly Earnings Results

Key Points

• Earnings missed expectations: Sonic Automotive reported quarterly EPS of $1.30, below the $1.66 consensus estimate, while revenue rose 0.4% year over year to $3.99 billion, slightly below forecasts.
• Growth areas offset dealership pressure: EchoPark revenue increased 14% and used-vehicle volume rose 22%, while Powersports revenue surged 35% to a record $113.7 million. Franchise dealerships faced a 7% decline in same-store new-vehicle volume, though used-vehicle and fixed-operations results remained resilient.
• Outlook and sentiment remain mixed: Sonic maintained full-year SG&A guidance, retained approximately $585 million in liquidity, and declared a $0.41 quarterly dividend. Shares fell 0.9%, while analysts’ consensus rating remained “Hold” after several price-target reductions.

Sonic Automotive (NYSE:SAH - Get Free Report) posted its quarterly earnings results on Thursday. The company reported $1.30 earnings per share for the quarter, missing the consensus estimate of $1.66 by ($0.36), Zacks reports. Sonic Automotive had a return on equity of 20.75% and a net margin of 1.37%. The business had revenue of $3.99 billion during the quarter, compared to the consensus estimate of $4.03 billion. During the same period in the prior year, the firm earned $1.41 earnings per share. The business's revenue for the quarter was up .4% on a year-over-year basis.

Here are the key takeaways from Sonic Automotive's conference call:

• Record quarterly results: Sonic Automotive reported record revenue of $4.0 billion and gross profit of $617.5 million, with adjusted EPS of $1.30. Management maintained its full-year SG&A guidance despite near-term cost pressure.
• Franchise dealerships remained resilient: Same-store new-vehicle volume fell 7%, partly due to difficult comparisons from last year’s EV demand pull-forward, but new-vehicle GPU held at $3,000 and market share was maintained. Used-vehicle volume rose 3%, while fixed-operations gross profit increased 1% amid affordability challenges.
• EchoPark delivered strong volume growth: Revenue increased 14% and used-vehicle retail volume rose 22%, supported by improved sourcing and consumer demand. Sonic plans to open an Orlando location in December and invest $5 million to $7 million in fourth-quarter brand marketing, although that spending is expected to limit EchoPark adjusted EBITDA to $2 million-$4 million.
• Powersports continued its rapid expansion: Revenue grew 35% to a quarterly record of $113.7 million, with reported new and used retail unit volumes increasing 32% and 35%, respectively. Management said it sees continued acquisition and operational growth opportunities in the segment.
• Capital allocation remains flexible: Sonic ended the quarter with approximately $585 million of available liquidity, including $201 million of cash and floor-plan deposits, and announced a quarterly dividend of $0.41 per share. Management is weighing share repurchases under its remaining $528 million authorization against acquisition opportunities.

Sonic Automotive Trading Down 0.9%

SAH stock traded down $0.56 on Thursday, reaching $62.55. The company's stock had a trading volume of 277,350 shares, compared to its average volume of 286,954. The business has a fifty day simple moving average of $68.43 and a two-hundred day simple moving average of $73.10. Sonic Automotive has a 12-month low of $54.11 and a 12-month high of $113.67. The firm has a market cap of $1.98 billion, a PE ratio of 10.04, a PEG ratio of 1.16 and a beta of 0.92. The company has a debt-to-equity ratio of 1.88, a quick ratio of 0.25 and a current ratio of 1.01.

Insiders Place Their Bets

In related news, major shareholder Paul P. Rusnak acquired 12,555 shares of Sonic Automotive stock in a transaction on Wednesday, October 14th. The shares were acquired at an average cost of $59.90 per share, with a total value of $752,044.50. Following the transaction, the insider owned 5,176,776 shares in the company, valued at $310,088,882.40. This trade represents a 0.24% increase in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available at this link. Insiders have acquired a total of 76,776 shares of company stock valued at $4,584,694 in the last quarter. Insiders own 43.68% of the company's stock.

Analysts Set New Price Targets

A number of equities research analysts have recently weighed in on SAH shares. Barclays lowered their target price on Sonic Automotive from $87.00 to $75.00 and set an "equal weight" rating for the company in a research note on Tuesday, October 6th. UBS Group reduced their price target on Sonic Automotive from $107.00 to $74.00 and set a "buy" rating on the stock in a research report on Wednesday, October 7th. Morgan Stanley reduced their price target on Sonic Automotive from $72.00 to $57.00 and set an "underweight" rating on the stock in a research report on Monday, October 5th. Weiss Ratings cut Sonic Automotive from a "buy (b-)" rating to a "hold (c+)" rating in a research note on Monday. Finally, Stephens set a $89.00 price objective on Sonic Automotive in a research report on Monday, July 13th. Four equities research analysts have rated the stock with a Buy rating, three have given a Hold rating and three have given a Sell rating to the stock. According to MarketBeat.com, the stock has a consensus rating of "Hold" and an average price target of $90.12.

Sonic Automotive Company Profile

Sonic Automotive, Inc is a U.S.-based automotive retailer headquartered in Charlotte, North Carolina. The company operates franchised dealerships that sell new and pre-owned vehicles from a range of automobile manufacturers, along with related automotive products and services.

Its dealership operations provide vehicle financing and insurance products, maintenance and repair services, replacement parts, and collision-repair services. Sonic Automotive also operates EchoPark Automotive, a used-vehicle business focused on offering pre-owned vehicles and related finance and service products through dedicated retail locations.

Founded in 1997 by automotive entrepreneur O.

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