Sonic Automotive (NYSE:SAH) Trading Down 5.5% - Here's Why

Key Points

• Sonic Automotive shares fell 5.5% during mid-day trading, slipping to about $79 after closing at $83.65, on volume well below its average session level.
• Recent analyst activity has been mixed, but the overall tone is cautious: the stock’s consensus rating is Hold with an average price target of $81.63, even as some firms raised targets or maintained buy ratings.
• The company reported better-than-expected quarterly EPS of $1.62, beat consensus estimates, and recently increased its quarterly dividend to $0.41 per share, implying an annualized yield of about 2.1%.

Sonic Automotive, Inc. (NYSE:SAH - Get Free Report)'s share price fell 5.5% during mid-day trading on Wednesday . The company traded as low as $79.93 and last traded at $79.0290. 72,077 shares were traded during mid-day trading, a decline of 74% from the average session volume of 275,553 shares. The stock had previously closed at $83.65.

Analyst Upgrades and Downgrades

A number of brokerages have recently issued reports on SAH. Bank of America initiated coverage on shares of Sonic Automotive in a research note on Wednesday, March 4th. They issued a "neutral" rating on the stock. Citigroup boosted their price target on Sonic Automotive from $82.00 to $95.00 and gave the company a "buy" rating in a report on Monday, May 11th. Zacks Research upgraded Sonic Automotive from a "strong sell" rating to a "hold" rating in a report on Tuesday, April 28th. Needham & Company LLC reiterated a "buy" rating and issued a $90.00 price target on shares of Sonic Automotive in a report on Tuesday, March 31st. Finally, JPMorgan Chase & Co. boosted their price target on Sonic Automotive from $67.00 to $77.00 and gave the company an "underweight" rating in a report on Thursday, May 7th. Four investment analysts have rated the stock with a Buy rating, six have given a Hold rating and one has given a Sell rating to the company. According to MarketBeat, Sonic Automotive has an average rating of "Hold" and an average target price of $81.63.

Sonic Automotive Stock Performance

The company has a debt-to-equity ratio of 1.93, a quick ratio of 0.29 and a current ratio of 1.03. The stock's fifty day moving average is $76.33 and its two-hundred day moving average is $67.67. The firm has a market cap of $2.47 billion, a price-to-earnings ratio of 24.86, a PEG ratio of 1.92 and a beta of 0.88.

Sonic Automotive (NYSE:SAH - Get Free Report) last released its quarterly earnings data on Thursday, April 30th. The company reported $1.62 earnings per share for the quarter, topping analysts' consensus estimates of $1.40 by $0.22. Sonic Automotive had a net margin of 0.72% and a return on equity of 22.45%. The business had revenue of $3.69 billion for the quarter, compared to analysts' expectations of $3.73 billion. During the same quarter last year, the company earned $1.48 EPS. The company's revenue for the quarter was up 1.0% compared to the same quarter last year. On average, analysts expect that Sonic Automotive, Inc. will post 6.92 earnings per share for the current fiscal year.

Sonic Automotive Increases Dividend

The firm also recently disclosed a quarterly dividend, which will be paid on Wednesday, July 15th. Investors of record on Monday, June 15th will be issued a $0.41 dividend. This is a positive change from Sonic Automotive's previous quarterly dividend of $0.38. The ex-dividend date of this dividend is Monday, June 15th. This represents a $1.64 dividend on an annualized basis and a yield of 2.1%. Sonic Automotive's dividend payout ratio is currently 52.23%.

Insider Transactions at Sonic Automotive

In related news, President Jeff Dyke sold 50,000 shares of the stock in a transaction that occurred on Monday, June 8th. The stock was sold at an average price of $82.97, for a total value of $4,148,500.00. Following the completion of the transaction, the president directly owned 111,622 shares of the company's stock, valued at $9,261,277.34. This represents a 30.94% decrease in their position. The sale was disclosed in a filing with the SEC, which is available through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last three months, insiders sold 100,000 shares of company stock valued at $8,408,160. Corporate insiders own 43.68% of the company's stock.

Institutional Investors Weigh In On Sonic Automotive

Several institutional investors have recently bought and sold shares of the stock. Empowered Funds LLC lifted its holdings in Sonic Automotive by 64.4% in the first quarter. Empowered Funds LLC now owns 131,302 shares of the company's stock worth $9,003,000 after purchasing an additional 51,420 shares during the period. Quantinno Capital Management LP lifted its holdings in Sonic Automotive by 13.3% in the first quarter. Quantinno Capital Management LP now owns 10,043 shares of the company's stock worth $689,000 after purchasing an additional 1,178 shares during the period. Renaissance Technologies LLC raised its holdings in Sonic Automotive by 11.5% during the first quarter. Renaissance Technologies LLC now owns 88,126 shares of the company's stock worth $6,043,000 after purchasing an additional 9,100 shares in the last quarter. Public Employees Retirement System of Ohio raised its holdings in Sonic Automotive by 7.7% during the first quarter. Public Employees Retirement System of Ohio now owns 46,179 shares of the company's stock worth $3,166,000 after purchasing an additional 3,293 shares in the last quarter. Finally, State of Wyoming bought a new stake in Sonic Automotive during the first quarter worth approximately $79,000. Institutional investors and hedge funds own 46.92% of the company's stock.

Sonic Automotive Company Profile

Sonic Automotive, Inc is a publicly traded automotive retailer that operates a network of franchised new-car dealerships and used-vehicle dealerships across the United States. Headquartered in Charlotte, North Carolina, the company offers a range of services that include vehicle sales, leasing, finance and insurance products, service and parts, and collision repair. Sonic Automotive's dealerships represent numerous major automotive brands, and the company also markets a broad selection of pre-owned vehicles under its own banner.

In addition to its core dealership operations, Sonic Automotive has developed digital retail capabilities that allow customers to research, shop and complete transactions online.

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