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Sonic Automotive (SAH)
NYSE:SAH
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Sonic Automotive
(NYSE:SAH)
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Rating:71Outperform
Price Target:
$88.00
▲(11.96% Upside)
Sonic Automotive's overall stock score is driven by strong earnings performance and strategic growth initiatives, as highlighted in the earnings call. Financial performance shows robust revenue growth and improved cash flow, though high leverage poses a risk. Technical analysis indicates neutral momentum, while valuation metrics suggest moderate attractiveness. The positive outlook from the earnings call significantly boosts the score.
Positive Factors
Revenue Growth
Sonic Automotive's consistent revenue growth in its franchised dealerships segment indicates strong market demand and effective sales strategies, supporting long-term business expansion.
Liquidity Position
A strong liquidity position provides Sonic Automotive with the financial flexibility to invest in growth opportunities and weather economic uncertainties, enhancing its resilience.
Strategic Acquisitions
Strategic acquisitions expand Sonic Automotive's brand portfolio and revenue base, positioning the company for sustained growth in the competitive automotive retail market.
Negative Factors
High Leverage
High leverage can limit financial flexibility and increase vulnerability to economic downturns, potentially impacting Sonic Automotive's long-term financial health.
Declining Profit Margins
Declining profit margins suggest challenges in cost management and pricing power, which could pressure Sonic Automotive's profitability if not addressed.
Used Vehicle Segment Challenges
Challenges in the used vehicle segment, such as supply constraints, can hinder revenue growth and profitability, affecting Sonic Automotive's overall market performance.
Sonic Automotive (SAH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.66B
Dividend Yield1.82%
Average Volume (3M)182.46K
Price to Earnings (P/E)17.4
Beta (1Y)1.08
Revenue Growth4.48%
EPS Growth-16.26%
CountryUS
Employees10,800
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Dealerships
Share Statistics
EPS (TTM)2.19
Shares Outstanding22,120,758
10 Day Avg. Volume178,927
30 Day Avg. Volume182,455
Financial Highlights & Ratios
PEG Ratio0.41
Price to Book (P/B)2.03
Price to Sales (P/S)0.15
P/FCF Ratio-27.66
Enterprise Value/Market Cap2.54
Enterprise Value/Revenue0.47
Enterprise Value/Gross Profit3.10
Enterprise Value/Ebitda10.43
Forecast
1Y Price Target
$82.00Price Target Upside4.33% Upside
Rating ConsensusHold
Number of Analyst Covering7
Sonic Automotive Business Overview & Revenue Model
Company DescriptionSonic Automotive, Inc. operates as an automotive retailer in the United States. It operates in two segments, Franchised Dealerships and EchoPark. The Franchised Dealerships segment is involved in the sale of new and used cars and light trucks, and replacement parts; provision of vehicle maintenance, manufacturer warranty repair, and paint and collision repair services; and arrangement of extended warranties, service contracts, financing, insurance, and other aftermarket products for its guests. The EchoPark segment sells used cars and light trucks; and arranges finance and insurance product sales for its guests in pre-owned vehicle specialty retail locations. As of December 31, 2021, the company operated 140 new vehicle franchises representing 28 brands of cars and light trucks; 17 collision repair centers in 17 states; and 46 EchoPark stores in 16 states, including 11 Northwest Motorsport pre-owned vehicle stores. Sonic Automotive, Inc. was incorporated in 1997 and is based in Charlotte, North Carolina.
How the Company Makes MoneySonic Automotive generates revenue through several key streams. The primary source of income comes from the sale of new and used vehicles, where the company earns profits on the difference between the purchase price and the retail price. Additionally, Sonic Automotive makes money through the sale of financing and insurance products, including vehicle service contracts and extended warranties, which provide substantial margins. Another significant revenue stream is the service and parts department, where the company offers maintenance and repair services, generating income from labor and parts sales. Strategic partnerships with automotive manufacturers and financial institutions enhance their offerings and contribute to overall earnings. Furthermore, Sonic Automotive benefits from economies of scale and operational efficiencies across its dealership network, which helps to optimize profitability.
Sonic Automotive Earnings Call Summary
Earnings Call Date:Jun 30, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong performance in several segments, including record-breaking metrics in adjusted EPS, revenues, and gross profit. The EchoPark segment showed significant growth, and the company maintained a strong liquidity position with strategic acquisitions. However, challenges included a noncash impairment charge affecting GAAP EPS, a decline in used vehicle volume, and concerns about tariffs and market volatility. Despite these challenges, the overall outlook remained positive with strategic initiatives in place.Q2-2025 Updates
Positive Updates
Record-Breaking Earnings Metrics
Adjusted EPS for Q2 2025 was $2.19, a 49% increase year-over-year. Consolidated total revenues were a second quarter record, up 6% year-over-year, while consolidated gross profit grew 12% and consolidated adjusted EBITDA increased 22%.
Franchised Dealerships Segment Growth
Second quarter record franchise revenues of $3.1 billion, up 6% year-over-year on a same-store basis. Fixed operations gross profit and F&I gross profit set all-time quarterly records, up 12% and 15% year-over-year, respectively.
EchoPark Segment Success
Second quarter segment income was an all-time quarterly record $11.7 million, and adjusted EBITDA was an all-time quarterly record of $16.4 million, up 128% year-over-year.
Powersports Segment Growth
Generated record second quarter revenues of $48.1 million, up 21% year-over-year, and gross profit of $12.5 million, up 17% year-over-year.
Strong Liquidity and Acquisition
Ended the quarter with $775 million in available liquidity. Completed acquisition of four Jaguar, Land Rover dealerships, expected to contribute approximately $500 million in annualized revenues.
Dividend Increase
Board of Directors approved a 9% increase to the quarterly cash dividend to $0.38 per share.
Negative Updates
Noncash Impairment Charge Impact
Reported GAAP EPS was a loss of $1.34 per share due to a noncash charge relating to annual franchise asset impairment testing.
Challenges in Used Vehicle Segment
Same-store used volume decreased 4% year-over-year due to lower supply of late-model used vehicles and ongoing consumer affordability challenges.
Powersports Segment EBITDA Decline
Powersports segment adjusted EBITDA was $2 million, down 13% year-over-year.
Tariff and Market Volatility Concerns
Potential impact of tariffs on vehicle pricing and consumer demand, and challenges in managing inventory due to market volatility.
Company Guidance
During the Sonic Automotive Second Quarter 2025 Earnings Conference Call, management provided comprehensive guidance and insights into the company's performance. Despite a GAAP EPS loss of $1.34 per share due to a noncash impairment charge, the adjusted EPS was reported at $2.19, marking a 49% year-over-year increase. The company achieved a record consolidated total revenue for the second quarter, up 6% year-over-year, with a 12% growth in gross profit and a 22% rise in adjusted EBITDA. The Franchised Dealerships segment reported record revenues of $3.1 billion, with a same-store new retail volume increase of 5% and a 10% boost in same-store fixed operations revenues. EchoPark segment income and adjusted EBITDA hit all-time quarterly records, with segment total GPU reaching $3,747 per unit. The Powersports segment also showed robust growth with revenues up 21% year-over-year. Sonic Automotive ended the quarter with $775 million in liquidity and announced the acquisition of four Jaguar, Land Rover dealerships, expecting to add $500 million in annualized revenues. The company also announced a 9% increase in quarterly cash dividends. Management expressed optimism about navigating tariff impacts and maintaining strong financial performance through strategic adjustments and a focus on long-term growth.Sonic Automotive Financial Statement Overview
Summary
Sonic Automotive demonstrates robust revenue growth and improved cash flow management, which are positive indicators for the company's financial health. However, high leverage and declining profit margins present potential risks. Continued focus on operational efficiency and debt management will be crucial to sustain its growth trajectory and financial stability.Income Statement
Sonic Automotive shows strong revenue growth, with a notable increase of approximately 48% from 2020 to 2025. The gross profit margin remains stable, indicating efficient cost management despite fluctuations. However, the net profit margin and EBIT margin have decreased over the years, suggesting potential challenges in managing operational expenses or changes in market conditions.75
Positive
Balance Sheet
The company's debt-to-equity ratio indicates high leverage, which could pose risks if market conditions worsen. There is a positive trend in stockholders' equity, but the equity ratio remains relatively low, reflecting a high reliance on debt financing. Return on equity has improved, demonstrating more effective use of equity capital in generating profits.60
Neutral
Cash Flow
Sonic Automotive has shown significant improvement in free cash flow from 2024 to 2025, moving from negative to positive, indicating better cash management. The operating cash flow to net income ratio is strong, suggesting effective cash conversion. However, the free cash flow to net income ratio tends to fluctuate, which could impact long-term financial stability.70
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 14.49B | 14.22B | 14.37B | 14.00B | 12.40B | 9.77B |
| Gross Profit | 2.19B | 2.19B | 2.25B | 2.32B | 1.91B | 1.42B |
| EBITDA | 649.70M | 605.10M | 558.60M | 441.00M | 622.50M | 125.40M |
| Net Income | 244.60M | 216.00M | 178.20M | 88.50M | 348.90M | -50.66M |
Balance Sheet | ||||||
| Total Assets | 5.88B | 5.90B | 5.36B | 4.98B | 4.98B | 3.75B |
| Cash, Cash Equivalents and Short-Term Investments | 64.60M | 44.00M | 28.90M | 229.20M | 299.40M | 170.31M |
| Total Debt | 4.05B | 4.13B | 3.86B | 3.49B | 3.32B | 2.45B |
| Total Liabilities | 4.78B | 4.83B | 4.47B | 4.08B | 3.90B | 2.93B |
| Stockholders Equity | 1.09B | 1.06B | 891.90M | 895.20M | 1.08B | 814.80M |
Cash Flow | ||||||
| Free Cash Flow | 31.40M | -78.10M | -219.30M | 179.00M | 8.10M | 153.90M |
| Operating Cash Flow | 219.90M | 109.20M | -15.70M | 406.10M | 306.30M | 281.08M |
| Investing Cash Flow | -174.40M | -178.30M | -218.70M | -299.70M | -1.30B | -100.18M |
| Financing Cash Flow | -300.00K | 84.30M | 34.10M | -176.60M | 624.80M | -39.69M |
Sonic Automotive Technical Analysis
Neutral
78.60
Price Trends
78.91
Negative
75.78
Positive
70.12
Positive
Market Momentum
0.03
Positive
45.89
Neutral
19.84
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SAH, the sentiment is Neutral. The current price of 78.6 is below the 20-day moving average (MA) of 81.41, below the 50-day MA of 78.91, and above the 200-day MA of 70.12, indicating a neutral trend. The MACD of 0.03 indicates Positive momentum. The RSI at 45.89 is Neutral, neither overbought nor oversold. The STOCH value of 19.84 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | 5.90B | 12.77 | 15.20% | 0.43% | 19.75% | -10.74% | |
74 Outperform | 4.74B | 8.81 | 14.30% | ― | 8.39% | 40.35% | |
73 Outperform | 11.63B | 12.43 | 17.04% | 2.83% | 2.39% | 5.84% | |
73 Outperform | 8.52B | 9.99 | 12.75% | 0.65% | 10.25% | 9.08% | |
71 Outperform | $2.66B | 17.36 | 15.99% | 1.82% | 4.48% | -16.26% | |
70 Outperform | 8.21B | 13.65 | 25.67% | ― | 3.15% | -12.49% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% |
* Consumer Cyclical Sector Average
Performance Comparison
SAH
Sonic Automotive
78.60
22.55
40.23%
ABG
Asbury
241.20
13.25
5.81%
AN
AutoNation
217.82
40.90
23.12%
GPI
Group 1 Automotive
456.30
75.04
19.68%
LAD
Lithia Motors
332.43
27.60
9.05%
PAG
Penske Automotive Group
176.06
21.30
13.76%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.