A month has gone by since the last earnings report for Sonic Automotive (SAH Quick QuoteSAH - Free Report) . Shares have lost about 8.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Sonic Automotive due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Sonic Posts Record Q4 Revenues and Earnings

Sonic registered fourth-quarter 2021 adjusted earnings per share of $2.66, which beat the Zacks Consensus Estimate of $1.83. Higher-than-expected gross profit from new and used vehicle segments led to the outperformance. The bottom line was also 77.3% higher than $1.50 per share reported in the year-ago quarter. Total revenues amounted to $3,184.6 million, increasing 13.8% from the prior-year figure and topping the Zacks Consensus Estimate of $3,167.2 million.

Quarter in Detail

In the reported quarter, revenues from the sales of new vehicles rose 2.2% year over year to $1,351.9 million and topped the consensus mark of $1,249 million. Same-store unit sales volume inched down 19.2% to 22,186, but gross profit per unit surged 127.9% to $6,661. Gross profit totaled $147.8 million, outpacing the consensus mark of $117 million.

Revenues from the sales of used vehicles surged 26.1% from the prior-year level to $1,210.9 million but lagged the consensus mark of $1,365 million. Same-store unit sales decreased 13.2% to 22,006 in the quarter under review. Gross profit per unit jumped 98.2% year over year to $2,087. Gross profit totaled $45.9 million, outpacing the consensus mark of $32.6 million.

The EchoPark segment recorded revenues of $579.2 million, reflecting a 49.7% uptick from the year-ago figure. Its stores sold 18,144 units (with used-vehicle unit sales volume of 15,649), up 7.7% on a year-over-year basis. The segment’s gross profit increased 56.7% to $40.9 million.

Wholesale vehicle revenues soared 86.7% on a year-over-year basis to $110.5 million and marginally beat the consensus mark of $106 million. Revenues from parts, services and collision repair were up 12.8% year over year to $360.1 million but missed the Zacks Consensus Estimate of $367 million. Finance, insurance and other revenues came in at $151.2 million, up 10.4% from the corresponding quarter of 2020. The metric, however, lagged the consensus estimate of $166 million.

Selling, general and administrative expenses were up 32.5% year over year to $343.3 million in the quarter. The board of directors approved a 108% increase to the SAH’s quarterly cash dividend to 25 cents per share from 12 cents, payable on Apr 14, 2022, to all stockholders of record on Mar 15, 2022.  Since the end of the third quarter of 2021, Sonic has repurchased around 1 million shares of its Class A Common Stock for an aggregate purchase price of nearly $50.4 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

The consensus estimate has shifted 9.07% due to these changes.

VGM Scores

Currently, Sonic Automotive has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Sonic Automotive has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.