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Sonic Automotive Q2 Earnings Miss Estimates

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Sonic Automotive (SAH - Free Report) reported adjusted earnings per share of 50 cents in the second quarter of the year, which was up 11.1% from 45 cents a year ago but missed the Zacks Consensus Estimate by a penny. Earnings per share rose despite a 7.2% fall in net earnings to $26.4 million in the quarter due to lower outstanding shares compared with the 2012-second quarter.

Total revenue for the quarter rose 3.8% to $2.2 billion. Of this, revenue from vehicle trade increased 3.6% to $1.8 billion. Meanwhile, revenue from Parts, service and collision repair went up 4.0% to $307.0 million and from Finance, insurance and other services grew 8.6% to $69.2 million.

Revenue from new vehicles retail escalated 5.2% to $1.2 billion. New vehicle retail units increased 1.7% to 33,685 vehicles. However, new vehicle gross margins declined to 5.4% from 5.9% in the year-ago quarter.
Revenue from used vehicles retail rose marginally by about 1% to $539.0 million. Used vehicle unit volume rose marginally to 26,599 vehicles. However, gross margin improved to 7.0% from 6.7% in the year ago period.

Total gross margin remained flat at 14.7% in the quarter while overall operating margin decreased to 2.8% from 2.9% a year ago.

Sonic Automotive announced the acquisition of Murray Mercedes Benz of Denver and Murray BMW of Denver in May. These acquisitions are expected to close in the third quarter of the year.

Charlotte, N. C. based Sonic Automotive is a Fortune 500 company. It is one of the largest automotive retailers in the U.S. The company currently operates 100 dealerships spread across 14 states and 25 major metropolitan markets. It represents about 25 different automotive brands with the majority of the dealerships being luxury and import brands.

Sonic Automotive reiterated its guidance of earnings per share from continuing operations between $1.93 and $2.03 for the full year 2013. Currently, SAH retains a Zacks Rank #3 (Hold).

Other stocks that are performing well in the automotive retail industry include Asbury Automotive Group, Inc. (ABG - Free Report) , Lithia Motors (LAD - Free Report) and Group 1 Automotive Inc. (GPI - Free Report) . Asbury Automotive and Lithia Motors are Zacks Rank #1 (Strong Buy) stocks while Group 1 Automotive is a Zacks Rank #2 (Buy) stock.

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