Sonic Automotive (NYSE:SAH) Issues Earnings Results, Misses Expectations By $0.36 EPS

Sonic Automotive (NYSE:SAH) released its quarterly earnings results on Thursday. The company reported $1.30 earnings per share (EPS) for the quarter, missing analysts’ consensus estimates 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 company had revenue of $3.99 billion during the quarter, compared to the consensus estimate of $4.03 billion. During the same period in the previous year, the company earned $1.41 earnings per share. Sonic Automotive’s quarterly revenue 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 Stock Up 0.6%

SAH stock traded up $0.35 during trading on Thursday, hitting $63.48. 480,080 shares of the company’s stock traded hands, compared to its average volume of 287,997. The firm has a market capitalization of $2.01 billion, a P/E ratio of 10.12, a PEG ratio of 1.16 and a beta of 0.92. The business has a fifty day simple moving average of $68.43 and a two-hundred day simple moving average of $73.10. The company has a quick ratio of 0.25, a current ratio of 1.01 and a debt-to-equity ratio of 1.88. Sonic Automotive has a 1 year low of $54.11 and a 1 year high of $113.67.

Analysts Set New Price Targets

SAH has been the topic of a number of research reports. Zacks Research downgraded Sonic Automotive from a “hold” rating to a “strong sell” rating in a research note on Monday, October 12th. Weiss Ratings lowered shares of Sonic Automotive from a “buy (b-)” rating to a “hold (c+)” rating in a research report on Monday. Morgan Stanley reduced their price objective on shares of Sonic Automotive from $72.00 to $57.00 and set an “underweight” rating for the company in a research note on Monday, October 5th. UBS Group decreased their price objective on shares of Sonic Automotive from $107.00 to $74.00 and set a “buy” rating on the stock in a research report on Wednesday, October 7th. Finally, Barclays dropped their target price on shares of Sonic Automotive from $87.00 to $75.00 and set an “equal weight” rating for the company in a report on Tuesday, October 6th. Four investment analysts have rated the stock with a Buy rating, three have issued a Hold rating and three have assigned a Sell rating to the company. Based on data from MarketBeat.com, Sonic Automotive presently has a consensus rating of “Hold” and an average price target of $90.12.

Insider Activity at Sonic Automotive

In other Sonic Automotive news, major shareholder Paul P. Rusnak purchased 12,555 shares of the stock in a transaction on Wednesday, October 14th. The stock was acquired at an average price of $59.90 per share, with a total value of $752,044.50. Following the completion of the acquisition, the insider owned 5,176,776 shares in the company, valued at $310,088,882.40. The trade was a 0.24% increase in their ownership of the stock. The acquisition was disclosed in a filing with the SEC, which can be accessed through this link. Insiders have bought 76,776 shares of company stock worth $4,584,694 over the last ninety days. Corporate insiders own 43.68% of the company’s stock.

About Sonic Automotive

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.