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Sonic Automotive (SAH)
NYSE:SAH
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Sonic Automotive
(NYSE:SAH)68Neutral
Positive Factors
Franchise Execution
The execution on the franchise side is encouraging, leading to an updated standalone multiple.
Inventory Resolution
There is a resolved issue with elevated inventory that was previously holding back growth and guidance.
Negative Factors
Echo Park Growth Concerns
Echo Park's growth is underappreciated due to a lower unit and earnings trajectory.
Sonic Automotive (SAH) vs. S&P 500 (SPY)
Market Cap
$2.23B
Dividend Yield1.89%
Average Volume (3M)204.36K
Price to Earnings (P/E)10.7
Beta (1Y)1.15
Revenue Growth-1.03%
EPS Growth24.64%
CountryUS
Employees10,800
SectorConsumer Cyclical
Sector Strength53
IndustryVehicles
Share Statistics
EPS (TTM)6.17
Shares Outstanding21,692,669
10 Day Avg. Volume200,631
30 Day Avg. Volume204,364
Financial Highlights & Ratios
PEG Ratio0.43
Price to Book (P/B)N/A
Price to Sales (P/S)0.16
Price to Cash Flow (P/CF)6.40
P/FCF Ratio5.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$89.25Price Target Upside32.44% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Sonic Automotive Business Overview & Revenue Model
Company DescriptionSonic Automotive, Inc. operates as a automotive retailer. Its services include sales of both new and used cars and light trucks, sales of replacement parts and performance of vehicle maintenance, warranty, paint and repair services and arrangement of extended service contracts, financing, insurance, vehicle protection products and other aftermarket products for automotive customers. The company operates through the following segments: Franchised Dealerships and EchoPark. The Franchised Dealerships segment provides comprehensive services, which include sales of both new and used cars and light trucks, sales of replacement parts and performance of vehicle maintenance, manufacturer warranty repairs, and paint and collision repair services. The EchoPark segment sales used cars and light trucks. Sonic Automotive was founded by Ollen Bruton Smith and Bryan Scott Smith in January 1997 and is headquartered in Charlotte, NC.
How the Company Makes MoneySonic Automotive generates revenue through several key streams. The primary source of income is the sale of new and used vehicles across its network of franchised dealerships and EchoPark locations. In addition to vehicle sales, the company earns significant revenue from its service and parts operations, which provide maintenance and repair services as well as replacement parts to customers. Financial services, including the arrangement of vehicle financing, insurance products, and extended service contracts, also contribute to the company's earnings. Partnerships with automotive manufacturers, financial institutions, and other service providers enhance Sonic Automotive's ability to offer competitive financing and insurance options, supporting its overall revenue generation strategy.
Sonic Automotive Financial Statement Overview
Summary
Sonic Automotive shows strong revenue generation and gross margins, with effective cost management. However, high leverage and recent cash flow challenges present financial risks. Improving net profitability and cash flow conversion is crucial.Income Statement
Sonic Automotive demonstrated stable revenue generation, with a slight decline in total revenue from the previous year. The gross profit margin remains strong, indicating effective cost management. However, the net profit margin is moderate, suggesting room for improvement in profitability. The EBIT margin is solid, but the negative EBITDA in the latest year suggests challenges with non-operating expenses.75
Positive
Balance Sheet
The debt-to-equity ratio indicates relatively high leverage, which could pose risks if interest rates rise or revenue declines. However, the return on equity is reasonable, reflecting decent profitability relative to shareholder investment. The equity ratio shows a moderate level of equity financing, providing some financial stability.65
Positive
Cash Flow
Cash flow management appears to be a challenge, as indicated by negative free cash flow in the latest year. While operating cash flow has improved from a negative position, it remains low relative to net income. The company's ability to convert earnings into cash is an area needing attention, given the negative free cash flow to net income ratio.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 14.22B | 14.37B | 14.00B | 12.40B | 9.77B | Gross Profit |
| 2.19B | 2.25B | 2.32B | 1.91B | 1.42B | EBIT |
| 461.50M | 423.60M | 634.60M | 538.40M | 304.05M | EBITDA |
| 605.10M | 558.60M | 441.00M | 622.50M | 125.40M | Net Income Common Stockholders |
| 216.00M | 178.20M | 88.50M | 348.90M | -50.66M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 44.00M | 28.90M | 229.20M | 299.40M | 170.31M | Total Assets |
| 5.90B | 5.36B | 4.98B | 4.98B | 3.75B | Total Debt |
| 4.13B | 3.86B | 3.49B | 3.32B | 2.45B | Net Debt |
| 4.08B | 3.83B | 3.26B | 3.02B | 2.28B | Total Liabilities |
| 4.83B | 4.47B | 4.08B | 3.90B | 2.93B | Stockholders Equity |
| 1.06B | 891.90M | 895.20M | 1.08B | 814.80M |
| Cash Flow | Free Cash Flow | |||
| -78.10M | -219.30M | 179.00M | 8.10M | 153.90M | Operating Cash Flow |
| 109.20M | -15.70M | 406.10M | 306.30M | 281.08M | Investing Cash Flow |
| -178.30M | -218.70M | -299.70M | -1.30B | -100.18M | Financing Cash Flow |
| 84.30M | 34.10M | -176.60M | 624.80M | -39.69M |
Sonic Automotive Technical Analysis
Negative
67.39
Price Trends
68.71
Negative
65.29
Positive
60.98
Positive
Market Momentum
-0.86
Positive
35.55
Neutral
13.04
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SAH, the sentiment is Negative. The current price of 67.39 is below the 20-day moving average (MA) of 71.36, below the 50-day MA of 68.71, and above the 200-day MA of 60.98, indicating a neutral trend. The MACD of -0.86 indicates Positive momentum. The RSI at 35.55 is Neutral, neither overbought nor oversold. The STOCH value of 13.04 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SAH.
Sonic Automotive Risk Analysis
Sonic Automotive disclosed 36 risk factors in its most recent earnings report. Sonic Automotive reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Sonic Automotive Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $5.83B | 11.97 | 16.75% | 0.42% | 11.53% | -13.75% | |
73 Outperform | $8.36B | 10.75 | 12.05% | 0.64% | 16.75% | -18.09% | |
72 Outperform | $5.02B | 11.87 | 12.29% | ― | 16.11% | -24.72% | |
70 Outperform | $12.48B | 27.60 | 7.42% | ― | -2.46% | -6.19% | |
68 Neutral | $2.23B | 10.71 | 22.11% | 1.89% | -1.03% | 24.64% | |
63 Neutral | $6.71B | 10.13 | 28.17% | ― | -0.68% | -25.24% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% |
* Consumer Cyclical Sector Average
Performance Comparison
SAH
Sonic Automotive
66.09
15.75
31.29%
ABG
Asbury
260.55
54.13
26.22%
AN
AutoNation
174.35
29.17
20.09%
KMX
CarMax
79.10
-1.48
-1.84%
GPI
Group 1 Automotive
445.13
184.82
71.00%
LAD
Lithia Motors
316.94
24.73
8.46%
Sonic Automotive Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: -9.86% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of strong performance in franchise revenues and strategic growth initiatives, alongside some challenges in the used vehicle market and a decrease in adjusted EPS. The company's proactive approach in strategic acquisitions and technician hiring shows a positive outlook, despite the shortfall in EchoPark's EBITDA and the decrease in EPS.Highlights
Record Quarterly Franchise Revenues
Generated all-time record quarterly franchise revenues of $3.4 billion, up 12% year over year, driven by a 13% increase in new retail volume and a 10% increase in fixed operations revenues.
Successful Technician Hiring Initiative
Exceeded the goal of hiring 335 net technicians during 2024, setting the stage for strong fixed operations growth in 2025.
EchoPark Segment Profitability
EchoPark achieved a full-year adjusted EBITDA of $27.6 million, up from a loss of $83 million in 2023, achieving profitability on a pretax basis.
Strong Balance Sheet and Liquidity
Ended the year with $862 million in available liquidity, including $384 million in cash and floor plan deposits, enabling strategic capital deployment.
Dividend Approval
Board of directors approved a quarterly cash dividend of $0.35 per share, payable on April 15, 2025.
Lowlights
Decrease in Adjusted EPS
Adjusted EPS was $1.51 per share, a 7% decrease year over year.
EchoPark EBITDA Shortfall
Fourth quarter adjusted EBITDA for EchoPark was $4.2 million, below the previous guidance of $7.8 million, due to a $200 sequential decline in used GPU.
Challenges in Used Vehicle Market
EchoPark revenues were down 9% year over year, and retail unit sales volume decreased by 5%.
Company Guidance
During the Sonic Automotive Fourth Quarter 2024 earnings call, the company provided robust guidance and shared several key metrics. They reported a GAAP EPS of $1.67 and an adjusted EPS of $1.51, marking a 7% decrease year-over-year. Consolidated total revenues reached an all-time quarterly high, up 9% from the previous year, with consolidated gross profit increasing by 6% and adjusted EBITDA by 5%. The franchise dealership segment achieved record quarterly revenues of $3.4 billion, driven by a 13% increase in new retail volume and a 5% rise in used retail volume. Fixed operations gross profit rose by 12%, while F&I gross profit saw a 14% boost. Meanwhile, EchoPark's adjusted EBITDA fell short of guidance at $4.2 million due to a decline in used GPU, though the segment reported a 29% increase in gross profit on a same-store basis. Power Sports generated $30.6 million in revenue but faced a $1 million adjusted EBITDA loss. Sonic Automotive ended the year with $862 million in available liquidity and plans to pursue new vehicle franchise acquisitions in 2025. They anticipate that strategic initiatives and market conditions will support continued growth in their diversified business model.Sonic Automotive Corporate Events
DividendsBusiness Operations and StrategyFinancial Disclosures
Sonic Automotive Achieves Record Financial Results in 2024
Positive
Feb 12, 2025
Sonic Automotive reported record financial results for the fourth quarter and full year of 2024, with quarterly revenues reaching an all-time high of $3.9 billion and annual revenues at $14.2 billion. Despite a slight annual revenue decline, the company saw significant improvements in profitability, particularly in its EchoPark segment, which achieved a substantial turnaround in adjusted EBITDA. The company also exceeded its technician hiring goals and made strategic acquisitions expected to bolster future revenues. The approval of a quarterly cash dividend reflects Sonic’s robust financial health and commitment to shareholder returns.
Executive/Board Changes
Sonic Automotive Announces Executive Compensation Plans
Neutral
Feb 7, 2025
On February 5, 2025, Sonic Automotive’s Compensation Committee outlined performance-based cash bonuses and restricted stock units for its executive officers. The performance-based incentives are tied to adjusted earnings per share and customer satisfaction goals for the 2025 calendar year, with the evaluation taking place by March 15, 2026. Additionally, base salaries for the executive officers were retroactively increased from January 1, 2025, reflecting the company’s commitment to aligning executive compensation with performance metrics.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.