SAH's EchoPark brand just opened its seventh location in Texas
Sonic Automotive, Inc. (NYSE:SAH) is an American automotive company. SAH is one of the largest automotive retailers in the United States. Sonic Automotive operates in 14 states with more than 100 dealerships representing 25 different brands of automobiles. SAH's dealerships market new cars, used cars, replacement parts, and vehicle maintenance, as well as provide collision repair services.
Yesterday, August 10, Sonic Automotive announced the continued expansion of their EchoPark Automotive brand with the opening of their newest delivery center in the Austin market. SAH already operates six other EchoPark locations in Texas which, according to Sonic Automotive, should provide an additional level of familiarity for Austin car buyers.
Sonic Automotive stock has increased in price by approximately 20% year-over-year and SAH is up by 56% since bottoming at a 52-week low of $34.05 last October. Additionally, shares of SAH have grown 37% year-to-date. However, Sonic Automotive stock is down 9% since recently reaching a 52-week high (and all-time high) of $58.00 on August 2. Moreover, Sonic Automotive offers a forward dividend of $0.48 and a dividend yield 0.91%.
On the earnings front, Sonic Automotive has outperformed expectations on all four of its most recent earnings reports. For Q2 of 2020, SAH beat analyst estimates by a margin of $0.34 and reported an EPS of $0.65. For Q3 of 2020, the automotive company's EPS increased to $1.29 and beat expectations by a margin of $0.13. For Q4 of 2020, Sonic Automotive posted another increase in earnings, rising to $1.50 per share and beating estimates by a margin of $0.10. For Q1 of 2021, SAH reported an EPS of $1.23 and beat expectations by a margin of $0.31.
From a fundamental point of view, SAH is a strong value play, but not the most secure option available on the market. Sonic Automotive stock trades at a very impressive price-earnings ratio of 7.96. Sonic Automotive has also maintained steady revenue growth, for the most part, with their sales increasing by 16% since fiscal 2017. However, the automotive company lacks stability on the bottom-line. Although SAH’s net income is up by 206%, the company experienced significant declines in fiscal 2018 and fiscal 2020, even reporting $51 million in net losses in its most recent annual report. Nonetheless, the risk-reward potential for Sonic Automotive stock continues to be attractive, with the company having an overall positive trajectory.