Critical Contrast: Sonic Automotive (SAH) vs. The Competition

Sonic Automotive (NYSE: SAH) is one of 20 public companies in the “Automotive dealers & gasoline service stations” industry, but how does it weigh in compared to its peers? We will compare Sonic Automotive to similar companies based on the strength of its institutional ownership, risk, profitability, valuation, analyst recommendations, earnings and dividends.

Analyst Recommendations

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This is a breakdown of recent ratings and recommmendations for Sonic Automotive and its peers, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sonic Automotive 0 3 1 0 2.25
Sonic Automotive Competitors 116 608 661 28 2.43

Sonic Automotive presently has a consensus price target of $23.33, indicating a potential upside of 21.53%. As a group, “Automotive dealers & gasoline service stations” companies have a potential upside of 18.36%. Given Sonic Automotive’s higher possible upside, analysts plainly believe Sonic Automotive is more favorable than its peers.

Profitability

This table compares Sonic Automotive and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sonic Automotive 0.94% 11.17% 2.24%
Sonic Automotive Competitors 3.22% 33.52% 3.60%

Dividends

Sonic Automotive pays an annual dividend of $0.24 per share and has a dividend yield of 1.3%. Sonic Automotive pays out 13.0% of its earnings in the form of a dividend. As a group, “Automotive dealers & gasoline service stations” companies pay a dividend yield of 1.6% and pay out 20.5% of their earnings in the form of a dividend. Sonic Automotive has raised its dividend for 2 consecutive years.

Volatility and Risk

Sonic Automotive has a beta of 1.61, indicating that its share price is 61% more volatile than the S&P 500. Comparatively, Sonic Automotive’s peers have a beta of 9.98, indicating that their average share price is 898% more volatile than the S&P 500.

Earnings & Valuation

This table compares Sonic Automotive and its peers top-line revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Sonic Automotive $9.87 billion $92.98 million 10.38
Sonic Automotive Competitors $8.01 billion $218.36 million 12.43

Sonic Automotive has higher revenue, but lower earnings than its peers. Sonic Automotive is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Institutional & Insider Ownership

64.2% of Sonic Automotive shares are owned by institutional investors. Comparatively, 64.7% of shares of all “Automotive dealers & gasoline service stations” companies are owned by institutional investors. 32.3% of Sonic Automotive shares are owned by insiders. Comparatively, 17.0% of shares of all “Automotive dealers & gasoline service stations” companies are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Sonic Automotive peers beat Sonic Automotive on 11 of the 15 factors compared.

About Sonic Automotive

Sonic Automotive, Inc. is an automotive retailer in the United States. The Company’s operating segments include Franchised Dealerships and EchoPark. Its Franchised Dealerships segment consists of retail automotive franchises that sell new vehicles and buy and sell used vehicles, sell replacement parts, perform vehicle repair and maintenance services, and arrange finance and insurance products. The EchoPark segment consists of standalone specialty retail locations that provide customers an opportunity to search, buy, service, finance and sell pre-owned vehicles. Its franchised dealerships provide services, including sales of both new and used cars, and light trucks; sales of replacement parts and performance of vehicle maintenance, manufacturer warranty repairs, and paint and collision repair services (collectively, Fixed Operations), and arrangement of extended warranties, service contracts, financing, insurance and other aftermarket products (collectively, F&I) for its customers.

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