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Sonic Automotive (SAH) Up 6.5% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Sonic Automotive, Inc. (SAH - Free Report) . Shares have added about 6.5% in that time frame.

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

Sonic Automotive’s Q1 Earnings Drive Past Estimates

Sonic Automotive registered adjusted earnings per share of 26 cents in first-quarter 2018 compared with 23 cents in the year-ago quarter. Also, earnings surpassed the Zacks Consensus Estimate of 25 cents.

Total revenues in the reported quarter increased 4.9% to $2.41 billion. The figure also beat the Zacks Consensus Estimate of $2.4 billion.

During the reported quarter, revenues from total new-vehicle sales inched up 0.8% year over year to $1.18 billion. Revenues from used vehicles rose 11.8% to $709 million. Wholesale-vehicle revenues rose 41.2% to $65.4 million. Revenues from parts, services and collision repair increased 2.7% to $142.4 million while finance, insurance and other revenues grew 12.8% to $93.7 million.

In first-quarter 2018, gross profit increased to $352.5 million from $350.3 million recorded a year ago. Selling, general and administrative expenses increased to $305 million from $292.2 million in the year-ago quarter. The company reported operating income of $20.2 million compared with $36.3 million in the year-ago quarter.

Dividend & Share Repurchase

The board of directors at Sonic Automotive announced a quarterly dividend of 6 cents per share. The dividend will be paid on Jul 13, 2018, to shareholders of record as of Jun 15, 2018.

During the reported quarter, the company repurchased roughly 1.2 million of common shares for approximately $23.4 million.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months.

VGM Scores

At this time, SAH has a nice Growth Score of B, though it is lagging a lot on the momentum front with a D. However, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

SAH has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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