Company Reports

Sonic Automotive reported second-quarter adjusted diluted EPS and revenue above the LSEG consensus for both metrics, but the stock still closed down 10.9% on July 30. Management increased the low end of its 2026 guidance for new vehicle gross profit per unit to $2,850 from $2,700.

Sonic Automotive is expanding beyond franchise auto dealerships to used vehicle stores and powersports. Its omnichannel process lets consumers shop digitally or in-store and helps Sonic procure more used-vehicle inventory. Management has also worked to make the car-buying process nearly paperless, place the customer with only one person for the entire transaction, and enable the customer to take delivery of a vehicle in an hour or less after deciding which one to buy. It's building out a powersports segment, which for now will likely focus on motorcycle stores such as Harley-Davidson and pursue acquisitions.

Sonic Automotive's first-quarter results sent its stock up 7.4% on April 30, with adjusted diluted earnings per share up 9% year over year to $1.62, well above the $1.39 LSEG consensus. The company also bought back 6% of its stock in the quarter.

Sonic Automotive is expanding beyond franchise auto dealerships. Its omnichannel process lets consumers shop digitally or in-store and helps Sonic procure more used-vehicle inventory. Management has also worked to make the car-buying process nearly paperless, place the customer with only one person for the entire transaction, and enable the customer to take delivery of a vehicle in an hour or less after deciding which one to buy. It's building out a powersports segment, which for now will likely focus on motorcycle stores such as Harley-Davidson and pursue acquisitions.

Sonic Automotive is expanding beyond franchise auto dealerships. Its omnichannel process lets consumers shop digitally or in-store and helps Sonic procure more used-vehicle inventory. Management has also worked to make the car-buying process nearly paperless, place the customer with only one person for the entire transaction, and enable the customer to take delivery of a vehicle in an hour or less after deciding which one to buy. It's building out a powersports segment, which for now will likely focus on motorcycle stores such as Harley-Davidson and pursue acquisitions.

Sonic Automotive's fourth-quarter adjusted diluted EPS of $1.52 rose about 1% year over year despite same-store franchise store revenue down 5%. Management also said EchoPark used-vehicle stores will resume opening in late 2026 even as the team is concerned about new vehicle affordability.

Sonic Automotive's stock fell 15.9% on Oct. 23 after reporting third-quarter adjusted diluted EPS of $1.41 that missed the LSEG consensus of $1.73. Management said the company self-insures health insurance, and medical costs alone were a $0.10 EPS headwind year over year.

Sonic Automotive's second-quarter adjusted diluted EPS of $2.19 beat the $1.63 LSEG consensus. Adjusted EBITDA for the EchoPark stand-alone used vehicle store segment was at an all-time high, more than doubling year over year to $16.4 million. Sonic also raised quarterly dividend by 8.6% to $0.38.

Sonic's EchoPark stand-alone used vehicle store business has improved operations since closing many stores in mid-2023 and early 2024 to focus on markets where it could get more scale and hold better brand awareness. The segment has posted positive adjusted EBITDA for five straight quarters.

Sonic Automotive is expanding beyond franchise auto dealerships. Its omnichannel process lets consumers shop digitally or in-store and helps Sonic procure more used-vehicle inventory. Management has also worked to make the car-buying process nearly paperless, place the customer with only one person for the entire transaction, and enable the customer to take delivery of a vehicle in an hour or less after deciding which one to buy. It's building out a powersports segment which for now will likely focus on motorcycle stores such as Harley-Davidson and pursue acquisitions.

Sonic Automotive's first-quarter 2025 results showed no major weaknesses with adjusted diluted EPS of $1.48, up 8% year over year. President Jeff Dyke expects a great second quarter, but tariff uncertainty looms large over second-half results. The firm withdrew some guidance on tariff uncertainty.

The White House on March 5 said that the 25% tariffs on vehicles imported into the US from Canada and Mexico that began a day earlier will be delayed for one month, provided those vehicles comply with the United States-Mexico-Canada Agreement. The change came after President Donald Trump spoke with the leaders of the Detroit Three, who argued that the tariffs hurt firms such as theirs but not those that export vehicles into the US from nations such as Japan, Germany, and South Korea. White House comments to the media on March 5 indicate that tariffs on all vehicle imports regardless of the country of origin will still commence on April 2, so we think 25% or reciprocal tariffs will start at that time.

The 25% tariffs on all US imports from Canada and Mexico began March 4. These tariffs are punishment for what President Donald Trump feels are inadequate measures by these two nations and China for fentanyl and illegal immigration into the US. Lately, White House rhetoric seems more focused on fentanyl than immigration. We consider these tariffs very bad news for our US autos coverage, but for now, we're leaving our fair value estimates in place.

Sonic Automotive is expanding beyond franchise auto dealerships. Its omnichannel process lets consumers shop digitally or in-store and helps Sonic procure more used-vehicle inventory. Management has also worked to make the car-buying process nearly paperless, place the customer with only one person for the entire transaction, and enable the customer to take delivery of a vehicle in an hour or less after deciding which one to buy. It's building out a powersports segment which for now will likely focus on motorcycle stores such as Harley-Davidson and pursue acquisitions.

Sonic Automotive’s fourth-quarter adjusted diluted earnings per share of $1.51 fell 7.4% year over year but beat the $1.46 LSEG consensus. We see the stock falling 4% on Feb. 12 as not deserved because the quarter was solid in our view, and 2025 should be a good year for the company, provided possible 25% tariffs on Canadian and Mexican imports do not derail the US economy. We are not changing our fair value estimate, but we will reassess all modeling inputs when we roll our model forward for the 10-K.

We expect trade policy and electric vehicle tax credits to be the US auto industry focus of a second US presidential term for Donald Trump. Emission regulations will also likely come into play, as we don't expect the Trump administration to grant California a waiver to set its own rules under the Clean Air Act of 1970. We also expect Environmental Protection Agency rules for 2027-32 model years issued in March, which, relative to the 2026 rule, call for a nearly 50% reduction in average light vehicle fleet carbon dioxide emissions for 2032 down to 85 grams (73 for cars and 90 for trucks) of C02 per mile, to be reduced or eliminated.

Sonic Automotive’s third-quarter results gave us no reason to change our fair value estimate, even though adjusted diluted earnings per share fell 38% year over year to $1.26, missing the $1.43 LSEG consensus. The stock still rose 3.6% on Oct. 24, which we think is due to adjusted EPS rising to $1.64 if one excludes the $0.05 impact of a large BMW stop sale on most of its SUVs, plus a $0.33 add-back for lost business in July from the June 19 cyberattack on dealer management system vendor CDK. Management sounded optimistic on the call that the normal seasonal pattern of strong fourth-quarter results due to Sonic’s premium brand mix will occur this year, which we agree with, given that the firm’s BMW sales—Sonic’s largest brand at 21% of total revenue—are up over 20% in October.

After adjusting our model for how 2024 is trending, we are leaving our fair value estimate for Sonic Automotive in place. Second-quarter adjusted diluted EPS fell 19.7% year over year to $1.47 but still beat the $1.38 LSEG consensus. Sonic uses CDK as its dealer management system provider, so GAAP earnings had about a $30 million pretax profit hit from the cyberattack that affected CDK starting on June 19. Sonic’s system is again operational but was having problems well into July. Within the $30 million, Sonic took an $11.6 million special item charge for compensation given to sales and service technicians to make up for lost business, something the other dealers we cover also did. We consider the payout prudent as it likely helped retention, and we don’t see a good reason to lose people for a temporary business interruption. The breakout of lost business between sales and service was not disclosed, but we don’t expect a lot of the $30 million to be made up in the second half of 2024 as consumers likely already bought a vehicle at another dealer or used-vehicle retailer and not all service needs can be deferred.

Sonic Automotive's stock rose nearly 11% on April 25 after the firm reported a good first quarter. Adjusted diluted EPS of $1.36 rose 2.3% year over year and beat the $1.30 LSEG consensus. We are leaving our fair value estimate in place. We like that Sonic repurchased $27 million of stock in the quarter below our fair value estimate, and liquidity is solid at $847 million. EchoPark delivered good news with its first positive adjusted EBITDA quarter for any quarter since first-quarter 2021.

Sonic Automotive is expanding beyond franchise auto dealerships. Its omnichannel Digital One Stop process and the CarCash app let consumers shop digitally or in-store and helps Sonic procure more used-vehicle inventory. Management has also worked to make the car-buying process nearly paperless, place the customer with only one person for the entire transaction, and enable the customer to take delivery of a vehicle in an hour or less after deciding which one to buy. It's building out a powersports segment which for now will likely focus on motorcycle stores such as Harley-Davidson.