Sonic Automotive (SAH) AI Stock Analysis

• Market Cap: $2.06B
• Dividend Yield: 2.27%
• Average Volume (3M): 201.34K
• Price to Earnings (P/E): 18.3
• Beta (1Y): 1.17
• Revenue Growth: 9.09%
• EPS Growth: -33.59%
• Country: US
• Employees: 10,800
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Auto - Dealerships
• EPS (TTM): 1.52
• Shares Outstanding: 21,546,494
• 10 Day Avg. Volume: 225,503
• 30 Day Avg. Volume: 201,338
• PEG Ratio: -0.39
• Price to Book (P/B): 1.97
• Price to Sales (P/S): 0.14
• P/FCF Ratio: 5.04
• Enterprise Value/Market Cap: 3.06
• Enterprise Value/Revenue: 0.42
• Enterprise Value/Gross Profit: 2.85
• Enterprise Value/Ebitda: 11.92
• 1Y Price Target: $71.40
• Price Target Upside: 16.15% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 5
• EPS Forecast (FY): 6.66
• Revenue Forecast (FY): $15.74B

• Rating: 56 Neutral
• Price Target: $65.00 ▲(5.74% Upside)
• Action: Reiterated Date: 02/24/26
• Date: Action: Reiterated 02/24/26

The score reflects middling financial quality dominated by elevated leverage and recently weaker revenue/margins, partially offset by a strong 2025 cash-flow rebound. Earnings-call tone and guidance were broadly constructive (records, improving EchoPark profitability, capital returns) but near-term volume pressure and rising floorplan interest expense temper upside. Technically the stock is neutral with longer-term downtrend signals, while valuation and dividend provide moderate support.

Positive Factors

High-margin fixed ops & F&I contribution

Stable, high-margin revenue from fixed operations and F&I provides durable earnings support regardless of new-vehicle cycles. With >75% of Q4 gross profit from these lines, Sonic can sustain margins and cash flow through periods of new-vehicle volume weakness, stabilizing long-term profitability and cash generation.

EchoPark profitability acceleration & scale plan

EchoPark's sharp margin improvement and record EBITDA show the used-car retail scale model is becoming more profitable. Management's plan to invest in brand marketing, non-auction sourcing and disciplined store rollouts targets structural scale benefits, improving unit economics and long-run growth optionality.

Strong liquidity and disciplined capital returns

Robust liquidity and ongoing buybacks/dividends demonstrate financial flexibility to fund operations, support store initiatives, and return capital. With $702M available, Sonic can absorb cyclical shocks, invest in EchoPark expansion, and sustain shareholder-friendly policies without immediate funding strain.

Negative Factors

Elevated leverage

Consistently high leverage (~4x equity) constrains Sonic's ability to absorb downturns or pursue rapid expansion. In a capital‑intensive, cyclical retail auto market, elevated debt increases interest sensitivity and reduces strategic optionality, raising refinancing and covenant risk during prolonged softness.

Revenue and net margin softness

Weaker top-line trends and compressed net margin to ~0.8% indicate structural demand and pricing pressures. Persistent revenue softness limits operating leverage, reduces retained earnings for debt reduction or reinvestment, and makes long-term margin recovery dependent on sustained improvement in volumes or higher-margin services.

Rising floorplan interest & BEV/tariff headwinds

A structural rise in floorplan financing costs (~10% headwind) directly erodes gross margin per vehicle. Coupled with BEV mix volatility and potential OEM cost pass‑throughs, Sonic faces persistent affordability headwinds that can depress volumes, increase working capital needs, and strain margin recovery over multiple quarters.

Sonic Automotive Business Overview & Revenue Model

Company Description

Sonic 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 Money

Sonic Automotive generates revenue primarily through the sale of new and used vehicles, which constitutes a significant portion of its earnings. The company also earns money through its finance and insurance (F&I) services, where it provides financing options to customers and sells insurance products, which contribute to higher profit margins. Additional revenue comes from service and parts sales, as customers return to dealerships for maintenance and repairs. Sonic Automotive has established partnerships with various vehicle manufacturers and financial institutions, enhancing its ability to offer competitive financing options and exclusive vehicle models. Additionally, the company's focus on digital retailing and customer experience has helped drive sales and service revenue, contributing to its overall financial performance.

Sonic Automotive Financial Statement Overview

Summary

Mixed fundamentals: revenue has softened and net margin compressed (~0.8% in 2025). Cash flow improved sharply in 2025 with free cash flow turning solidly positive, but volatility across prior years tempers confidence. The biggest constraint is the balance sheet—persistently high leverage (~4.0x debt/equity) in a cyclical industry reduces flexibility.

Income Statement

Revenue has softened recently, with 2025 down ~16% year over year after a modest dip in 2024, signaling a tougher demand/pricing environment. Profitability remains positive but thin: gross margin has been fairly steady in the mid-teens, while net margin compressed to ~0.8% in 2025 from ~1.5% in 2024 (and ~2.8% in 2021). Operating profitability is still in the mid-single-digits, but the trend is mixed versus prior years, limiting the income statement score despite generally stable gross profit.

Balance Sheet

Leverage is elevated and persistent, with debt running around ~3.9–4.3x equity over the last several years (2025 ~4.0x), which reduces financial flexibility in a cyclical industry. Equity has stayed roughly flat while debt has climbed versus earlier years, and returns on equity were solid in 2021–2024 but are shown as 0.0 in 2025 (data point likely incomplete/abnormal). Overall, the balance sheet appears more risk-tilted due to consistently high leverage.

Cash Flow

Cash generation improved meaningfully in 2025, with operating cash flow rebounding strongly and free cash flow turning solidly positive after negative free cash flow in 2023–2024. However, cash flow has been volatile across the period (including negative operating cash flow in 2023 and negative free cash flow in 2024), and 2025 free cash flow is down slightly versus the prior year’s level implied by the growth figure. Cash conversion versus earnings is mixed across years, but the 2025 rebound supports a mid-range score.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	15.15B	14.22B	14.37B	14.00B	12.40B
Gross Profit	2.22B	2.04B	2.10B	2.19B	1.81B
EBITDA	531.00M	610.80M	565.00M	441.00M	622.50M
Net Income	118.70M	216.00M	178.20M	88.50M	348.90M
Balance Sheet
Total Assets	5.97B	5.90B	5.36B	4.98B	4.98B
Cash, Cash Equivalents and Short-Term Investments	6.30M	44.00M	28.90M	229.20M	299.40M
Total Debt	4.23B	4.13B	3.86B	3.49B	3.32B
Total Liabilities	4.90B	4.83B	4.47B	4.08B	3.90B
Stockholders Equity	1.07B	1.06B	891.90M	895.20M	1.08B
Cash Flow
Free Cash Flow	417.50M	-89.60M	-256.50M	153.90M	503.50M
Operating Cash Flow	567.40M	97.70M	-52.90M	381.00M	801.70M
Investing Cash Flow	-499.00M	-178.30M	-218.70M	-299.70M	-1.30B
Financing Cash Flow	-106.10M	95.80M	71.30M	-151.50M	624.80M

Sonic Automotive Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 61.47
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 61.47 is below the 20-day moving average (MA) of 61.87, below the 50-day MA of 62.56, and below the 200-day MA of 70.42, indicating a bearish trend. The MACD of 0.15 indicates Negative momentum. The RSI at 47.49 is Neutral, neither overbought nor oversold. The STOCH value of 65.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SAH.

Sonic Automotive Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ABG	62 Neutral	$4.06B	8.41	13.31%	―	8.07%	60.95%
GPI	62 Neutral	$3.82B	12.97	11.10%	0.49%	19.45%	-24.27%
LAD	62 Neutral	$6.39B	8.66	12.36%	0.64%	8.56%	17.84%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
KMX	60 Neutral	$5.93B	13.83	7.46%	―	0.12%	2.78%
AN	58 Neutral	$6.70B	11.32	27.05%	―	6.06%	-1.71%
SAH	56 Neutral	$2.06B	18.33	12.51%	2.27%	9.09%	-33.59%

Sonic Automotive Corporate Events

Sonic Automotive Posts Record Profit Amid Dividend Increase

On February 18, 2026, Sonic Automotive reported fourth-quarter 2025 revenue of $3.9 billion, down 1% year over year, but delivered a record quarterly gross profit of $598.7 million and adjusted net income of $52.2 million, while also repurchasing about 0.6 million shares. Subsequent to year-end, the board approved a quarterly cash dividend of $0.38 per share, underscoring confidence in liquidity of more than $700 million and a disciplined capital allocation stance despite a 20% decline in reported quarterly net income.

For full year 2025, Sonic posted all-time record revenue of $15.2 billion and record gross profit of $2.4 billion, with adjusted net income rising 17% to $229.2 million even as reported net income fell 45% due to substantial non-cash impairment and storm-related charges. EchoPark and Powersports segments achieved record income and adjusted EBITDA, while the company continued to emphasize cost control and inventory discipline and returned $82.4 million to shareholders through buybacks, reinforcing its positioning as a resilient operator in a volatile auto retail market.

The most recent analyst rating on (SAH) stock is a Hold with a $69.00 price target. To see the full list of analyst forecasts on Sonic Automotive stock, see the SAH Stock Forecast page.

Sonic Automotive Sets 2026 Performance-Based Executive Bonus Plan

On February 11, 2026, Sonic Automotive’s Compensation Committee set the framework for 2026 performance-based cash bonuses covering the period from January 1 to December 31, 2026, for Chairman and CEO David Bruton Smith, President Jeff Dyke, and Executive Vice President and CFO Heath R. Byrd. The plan links executive bonuses to adjusted earnings per share and customer satisfaction, measured by the share of dealerships meeting manufacturer-defined benchmarks, with final payouts to be determined after the performance review and paid by March 15, 2027, reinforcing a strong alignment between leadership incentives, profitability, and dealership-level service quality.

The most recent analyst rating on (SAH) stock is a Hold with a $69.00 price target. To see the full list of analyst forecasts on Sonic Automotive stock, see the SAH Stock Forecast page.