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Sonic Automotive (SAH)
NYSE:SAH

Sonic Automotive (SAH) AI Stock Analysis

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Sonic Automotive

(NYSE:SAH)

Rating:76Outperform
Price Target:
$90.00
▲(2.77%Upside)
Sonic Automotive's overall stock score is driven primarily by robust financial performance and positive technical indicators. The company shows strong revenue growth and market momentum, although high leverage and market uncertainties present risks. The stock appears reasonably valued, with a solid earnings call performance underscoring its strategic achievements.
Positive Factors
Acquisition and Expansion
The acquisition of 4 dealerships adds $500M in sales, making Sonic the largest U.S. retailer of Jaguar Land Rover.
Business Performance
EchoPark is emerging as a more profitable and efficient business, delivering strong results and returning to pre-tax profitability.
Strategic Growth
SAH's entry into the powersports market offers a capital-light growth avenue with potential for consolidation and long-term upside.
Negative Factors
Market Uncertainty
Sonic understandably suspended a few aspects of its 2025 outlook and adjusted others due to growing uncertainty around the macro environment.
Regulatory Challenges
Regulatory headwinds from new vehicle tariffs are driving elevated uncertainty and potentially dampening unit enthusiasm.

Sonic Automotive (SAH) vs. SPDR S&P 500 ETF (SPY)

Sonic Automotive Business Overview & Revenue Model

Company DescriptionSonic Automotive, Inc. is a Fortune 500 company based in Charlotte, North Carolina, and is one of the largest automotive retailers in the United States. The company operates in two primary segments: Franchised Dealerships and EchoPark. Through its Franchised Dealerships segment, Sonic Automotive offers new and used vehicles, vehicle parts and accessories, and provides vehicle maintenance and repair services. EchoPark, its pre-owned car dealership brand, focuses on selling quality used cars at competitive prices. Sonic Automotive aims to deliver exceptional customer experiences across all its operations and is committed to growth through strategic acquisitions and expansion of its EchoPark brand.
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 at its franchised dealerships and EchoPark locations. Additionally, the company earns money by selling vehicle parts and accessories and providing maintenance and repair services. Financing and insurance products offered to customers also contribute to its revenue, as Sonic Automotive partners with financial institutions to offer competitive loan and lease options. Furthermore, the company benefits from manufacturer incentives and volume-based bonuses, which help bolster its income. EchoPark, which focuses on pre-owned vehicles, is a significant growth driver for the company, contributing to both sales volume and profitability.

Sonic Automotive Earnings Call Summary

Earnings Call Date:Apr 24, 2025
(Q1-2025)
|
% Change Since: 49.03%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong revenue growth, particularly in the EchoPark segment, and a robust balance sheet. However, challenges such as a decrease in used vehicle volume, tariff impacts, and an unfavorable warranty versus customer pay mix were noted. The sentiment reflects a balanced view of positive achievements and challenges faced.
Q1-2025 Updates
Positive Updates
Record First Quarter Revenues and Growth
First quarter consolidated total revenues increased by 8% year over year, setting a record for the first quarter. Consolidated gross profit grew by 6%, and consolidated adjusted EBITDA increased by 7%.
Franchised Dealership Segment Success
Franchised dealership segment achieved record revenues of $3.1 billion, up 9% year over year, driven by an 11% increase in new retail volume and a 6% increase in fixed operations revenues.
EchoPark Segment Achievements
EchoPark segment income reached an all-time quarterly record of $10.3 million, with adjusted EBITDA at a record $15.8 million, up 116% year over year. EchoPark segment total gross profit per unit was an all-time record of $3,411 per unit.
Strong Balance Sheet and Liquidity
The company ended the quarter with $947 million in available liquidity, including $430 million in combined cash and floor plan deposits.
Dividend Approval
Board of Directors approved a quarterly cash dividend of $0.35 per share, payable on July 15, 2025.
Negative Updates
Challenges with Used Vehicle Volume
Same-store used vehicle volume decreased by 2% year over year, primarily due to lower levels of late-model used vehicles and consumer affordability challenges.
Impact of Tariffs and Market Uncertainty
Concerns regarding the effects of tariffs on the automotive industry, affecting vehicle affordability and consumer demand, causing the company to update or withdraw certain financial guidance items.
Warranty vs. Customer Pay Mix
A significant mix of warranty work over customer pay in fixed operations, with 40% warranty growth versus 2-3% customer pay growth, not ideal for the company.
Company Guidance
In the first quarter of 2025, Sonic Automotive reported a GAAP EPS of $2.04 per share, with an adjusted EPS of $1.48, marking a 9% increase year over year. The company's consolidated total revenues reached a first-quarter record with an 8% increase, while consolidated gross profit and adjusted EBITDA rose by 6% and 7%, respectively. The franchised dealership segment achieved record revenues of $3.1 billion, driven by an 11% increase in new retail volume and a 6% rise in fixed operations revenues. However, same-store used vehicle volume declined by 2% due to affordability challenges, though same-store used GPU increased to $1,555 per unit. The EchoPark segment recorded an all-time high segment income of $10.3 million and an adjusted EBITDA of $15.8 million, up 116% from the previous year, with total gross profit per unit hitting a record $3,411. The Power Sports segment generated first-quarter revenues of $34.4 million, with a gross profit of $8.5 million, despite a segment adjusted EBITDA loss of $700,000. The company ended the quarter with $947 million in available liquidity and announced a quarterly cash dividend of $0.35 per share. Due to uncertainties surrounding tariff impacts, Sonic Automotive adjusted its 2025 financial guidance but remains committed to strategic growth and long-term value creation for shareholders.

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
75
Positive
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.
Balance Sheet
60
Neutral
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.
Cash Flow
70
Positive
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue14.49B14.22B14.37B14.00B12.40B9.77B
Gross Profit2.19B2.19B2.25B2.32B1.91B1.42B
EBITDA649.70M605.10M558.60M441.00M622.50M125.40M
Net Income244.60M216.00M178.20M88.50M348.90M-50.66M
Balance Sheet
Total Assets5.88B5.90B5.36B4.98B4.98B3.75B
Cash, Cash Equivalents and Short-Term Investments64.60M44.00M28.90M229.20M299.40M170.31M
Total Debt4.05B4.13B3.86B3.49B3.32B2.45B
Total Liabilities4.78B4.83B4.47B4.08B3.90B2.93B
Stockholders Equity1.09B1.06B891.90M895.20M1.08B814.80M
Cash Flow
Free Cash Flow31.40M-78.10M-219.30M179.00M8.10M153.90M
Operating Cash Flow219.90M109.20M-15.70M406.10M306.30M281.08M
Investing Cash Flow-174.40M-178.30M-218.70M-299.70M-1.30B-100.18M
Financing Cash Flow-300.00K84.30M34.10M-176.60M624.80M-39.69M

Sonic Automotive Technical Analysis

Technical Analysis Sentiment
Positive
Last Price87.57
Price Trends
50DMA
70.82
Positive
100DMA
66.98
Positive
200DMA
64.71
Positive
Market Momentum
MACD
4.05
Negative
RSI
81.38
Negative
STOCH
95.06
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SAH, the sentiment is Positive. The current price of 87.57 is above the 20-day moving average (MA) of 78.55, above the 50-day MA of 70.82, and above the 200-day MA of 64.71, indicating a bullish trend. The MACD of 4.05 indicates Negative momentum. The RSI at 81.38 is Negative, neither overbought nor oversold. The STOCH value of 95.06 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
LALAD
82
Outperform
$9.19B11.1212.95%0.62%12.96%-6.25%
GPGPI
77
Outperform
$6.03B13.1316.25%0.43%15.13%-15.98%
PAPAG
77
Outperform
$12.08B12.8718.57%2.76%3.29%-1.29%
SASAH
76
Outperform
$2.97B12.4924.52%1.60%1.59%43.91%
ABABG
67
Neutral
$5.09B12.3111.92%11.11%-23.41%
ABABG
67
Neutral
$5.09B12.3111.92%11.11%-23.41%
62
Neutral
$16.90B11.24-7.48%2.95%1.60%-23.76%
ANAN
60
Neutral
$8.01B12.5728.45%-0.24%-19.76%
ANAN
60
Neutral
$8.01B12.5728.45%-0.24%-19.76%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SAH
Sonic Automotive
87.57
37.33
74.30%
ABG
Asbury
258.66
36.06
16.20%
ABG
Asbury
258.66
36.06
16.20%
AN
AutoNation
212.50
56.36
36.10%
AN
AutoNation
212.50
56.36
36.10%
GPI
Group 1 Automotive
466.00
186.38
66.65%
LAD
Lithia Motors
352.90
111.50
46.19%
PAG
Penske Automotive Group
182.56
42.59
30.43%

Sonic Automotive Corporate Events

Business Operations and StrategyFinancial Disclosures
Sonic Automotive Reports Strong Q1 2025 Financial Performance
Positive
Apr 24, 2025

On April 24, 2025, Sonic Automotive reported a strong financial performance for the first quarter of 2025, with record revenues of $3.7 billion, an 8% increase year-over-year, and a significant rise in net income by 68% to $70.6 million. The EchoPark segment achieved all-time record gross profit and segment income, marking a 455% improvement from the previous year. Despite uncertainties related to tariffs, Sonic Automotive remains focused on expanding its market share and optimizing its operations to sustain long-term growth and shareholder value.

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.Date of analysis: Jun 24, 2025