We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Sonic Automotive, Inc. (SAH - Free Report) is seeing car buyers return with a vengeance this summer. This Zacks Rank #1 (Strong Buy) saw used vehicle sales turn green in June.
Sonic is one of the largest auto retailers in the United States with 86 franchised dealerships and 10 EchoPark pre-owned dealerships in 12 states and 21 major metropolitan markets.
It carries 20 different automotive brands with the majority of its dealerships in the luxury and import brands.
Used Car Sales are Hot in the Summer of 2020
On June 16, Sonic updated its business guidance for April, May and June through June 16.
Volumes have been better each month during that time.
At the franchised dealerships, used vehicles unit sales volume was down 32% in April, down 8% in May but were up 7% in June.
EchoPark's used vehicle unit sales volume also showed the same. April was down 36%, May was down 3% but June was up 18% through June 16.
It's other segments also saw improving business with New Vehicle Unit Sales Volume at the franchised dealers declining 40% in April, 20% in May and just 10% in June.
Similarly, Parts and Service Gross Profit improved from a decline of 43% in April, to 27% in May and a decline of 10% in June.
"Both new and used vehicle unit sales volumes, as well as fixed operations revenues, continue to meet or exceed our forecast at the outset of the pandemic, with used vehicle sales actually higher than last year in both the franchise and EchoPark locations in June," said David Smith, CEO of Sonic and EchoPark.
2020 Earnings Estimates Move Higher
Earnings estimates fell off a cliff several months ago when COVID-19 hit. The 2020 Zacks Consensus fell from $2.08 down to $0.96.
But analysts were too bearish. With the reopening of the economy continuing, and Sonic confirming that business is improving, the analysts have been raising their full year estimates.
3 estimates were raised in the last 60 days and 1 in the last month for 2020 which pushed the Zacks Consensus up to $1.40 from $0.96 just two months ago.
That is still an earnings decline of 47.2% as it made $2.65 a year ago.
But it's moving in the right direction: up.
Shares Soared After the Coronavirus Sell-Off
Like most stocks, Sonic saw its shares take a huge hit in February and March during the coronavirus sell-off.
But they have also had a furious recovery rally, gaining 137.8% over the last 3 months.
Year-to-date they're now up just 1.9%.
What's next?
Competitors are also reporting improving business metrics with sales rising in May and June including Penske Automotive Group (PAG - Free Report) .
Sonic shares aren't particularly cheap, thanks to the earnings slide. They trade with a forward P/E of 22.7.
But for investors looking for a recovery play, Sonic Automotive is one to keep on the short list.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Image: Bigstock
Bull of the Day: Sonic Automotive (SAH)
Sonic Automotive, Inc. (SAH - Free Report) is seeing car buyers return with a vengeance this summer. This Zacks Rank #1 (Strong Buy) saw used vehicle sales turn green in June.
Sonic is one of the largest auto retailers in the United States with 86 franchised dealerships and 10 EchoPark pre-owned dealerships in 12 states and 21 major metropolitan markets.
It carries 20 different automotive brands with the majority of its dealerships in the luxury and import brands.
Used Car Sales are Hot in the Summer of 2020
On June 16, Sonic updated its business guidance for April, May and June through June 16.
Volumes have been better each month during that time.
At the franchised dealerships, used vehicles unit sales volume was down 32% in April, down 8% in May but were up 7% in June.
EchoPark's used vehicle unit sales volume also showed the same. April was down 36%, May was down 3% but June was up 18% through June 16.
It's other segments also saw improving business with New Vehicle Unit Sales Volume at the franchised dealers declining 40% in April, 20% in May and just 10% in June.
Similarly, Parts and Service Gross Profit improved from a decline of 43% in April, to 27% in May and a decline of 10% in June.
"Both new and used vehicle unit sales volumes, as well as fixed operations revenues, continue to meet or exceed our forecast at the outset of the pandemic, with used vehicle sales actually higher than last year in both the franchise and EchoPark locations in June," said David Smith, CEO of Sonic and EchoPark.
2020 Earnings Estimates Move Higher
Earnings estimates fell off a cliff several months ago when COVID-19 hit. The 2020 Zacks Consensus fell from $2.08 down to $0.96.
But analysts were too bearish. With the reopening of the economy continuing, and Sonic confirming that business is improving, the analysts have been raising their full year estimates.
3 estimates were raised in the last 60 days and 1 in the last month for 2020 which pushed the Zacks Consensus up to $1.40 from $0.96 just two months ago.
That is still an earnings decline of 47.2% as it made $2.65 a year ago.
But it's moving in the right direction: up.
Shares Soared After the Coronavirus Sell-Off
Like most stocks, Sonic saw its shares take a huge hit in February and March during the coronavirus sell-off.
But they have also had a furious recovery rally, gaining 137.8% over the last 3 months.
Year-to-date they're now up just 1.9%.
What's next?
Competitors are also reporting improving business metrics with sales rising in May and June including Penske Automotive Group (PAG - Free Report) .
Sonic shares aren't particularly cheap, thanks to the earnings slide. They trade with a forward P/E of 22.7.
But for investors looking for a recovery play, Sonic Automotive is one to keep on the short list.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>