A month has gone by since the last earnings report for Sonic Automotive (
SAH Quick Quote SAH - Free Report) . Shares have lost about 13% 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's Q4 Earnings Beat Estimates But Fall Y/Y
Sonic registered fourth-quarter 2022 adjusted earnings per share of $2.61, which outperformed the Zacks Consensus Estimate of $2.26. Better-than-expected sales from the EchoPark segment led to the outperformance. But the bottom line fell nearly 1.8% from $2.66 per share reported in the year-ago quarter. Total revenues amounted to $3,591 million, an increase of 13%. The figure also surpassed the Zacks Consensus Estimate of $3,453 million.
Quarter in Detail
In the reported quarter, revenues from retail new vehicles increased 22% year over year to $1,555.3 million, missing the consensus mark of $1,718 million. Gross profit totaled $161 million, soaring 3% year over year but lagging the consensus mark of $198 million. Same-store unit sales volume increased by 5% to 23,416 however, gross profit per unit dipped 6% to $6,301.
Revenues from the sales of used vehicles went up 13% from the prior-year level to $823.4 million, lagging the consensus mark of $1,397 million. Gross profit totaled $38.4 million, declining 24%, also missing the consensus mark of $43.9 million. Same-store unit sales increased 6% to 23,624 in the quarter under review. Gross profit per unit came down 33% to $1,405.
The EchoPark segment reported quarterly revenues of $589.3 million, a 2% decline from the year-ago figure but beating the consensus metric of $562 million. Its stores sold 17,435 used vehicle units, up 11% on a year-over-year basis. The segment reported gross profit of $40.8 million, nearly the same as the previous quarter on a year-over-year basis but lagging the consensus metric of $48.53 million.
Wholesale vehicle revenues fell 28% on a year-over-year basis to $80 million, missing the consensus mark of $106 million. Revenues from parts, services and collision repair were up 12% to $411.1 million, crossing the Zacks Consensus Estimate of $402 million. Finance, insurance and other revenues came in at $173.8 million, up 15% from the corresponding quarter of 2021 and topping the consensus estimate of $150 million.
Selling, general and administrative expenses surged up by 7% year over year to $366.3 million in the quarter. The board of directors approved quarterly cash dividend, which amounted to 28 cents, same as the prior pay out, payable on Apr 14, 2023, to all stockholders of record on Mar 15, 2022. During the fourth quarter of 2022, Sonic repurchased around 0.7 million shares of its Class A Common Stock for an aggregate purchase price of nearly $35.8 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
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 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Sonic Automotive has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.