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Sonic's (SAH) Earnings Miss Estimates in Q2, Revenues Up Y/Y

·4 min read

Sonic Automotive, Inc. SAH registered second-quarter 2022 adjusted earnings per share of $2.45, which missed the Zacks Consensus Estimate of $2.52. Lower-than-expected gross profit from new and used vehicle segments led to the underperformance. The bottom line also fell 6.8% from $2.63 per share reported in the year-ago quarter. Total revenues amounted to $3,652.8 million, increasing 9% from the prior-year figure. However, the figure missed the Zacks Consensus Estimate of $3,972 million.

Quarter in Detail

In the reported quarter, revenues from retail new vehicles increased 3% year over year to $1,510.7 million but missed the consensus mark of $1,642 million. Same-store unit sales volume plunged 32% to 20,516, but gross profit per unit surged 50% to $5,804. Gross profit totaled $168.2 million, surging 42% year over year but lagging the consensus mark of $181 million.

Revenues from the sales of used vehicles went up 13% from the prior-year level to $1,449.4 million and crossed the consensus mark of $1,406 million. Same-store unit sales decreased 17% to 23,555 in the quarter under review. Also, gross profit per unit came down 20% to $1,553. Gross profit totaled $43.7 million, declining 21% and missing the consensus mark of $47.98 million.

The EchoPark segment reported all-time record quarterly revenues of $665.6 million, reflecting 12% uptick from the year-ago figure but missed the consensus metric of $909 million. Its stores sold 16,608 used-vehicle units, down 22% on a year-over-year basis. The segment’s gross profit increased 37% to $49.5 million and crossed the consensus metric of $45.15 million.

Wholesale vehicle revenues rose 43% on a year-over-year basis to $121.4 million but missed the consensus mark of $142 million. Revenues from parts, services and collision repair were up 15% year over year to $398.1 million but missed the Zacks Consensus Estimate of $434 million. Finance, insurance and other revenues came in at $173.2 million, edging down 2% from the corresponding quarter of 2021. The metric, however, beat the consensus estimate of $165 million.

Financials

Sonic had cash and cash equivalents of $327.1 million as of Jun 30, 2022, down from $299.4 million as of Dec 31, 2021. Total debt was $1,462 million as of Jun 30, 2022, down from the $1,510.7 million recorded on Dec 31, 2021.

Selling, general and administrative expenses flared up 26% year over year to $402.8 million in the quarter. The board of directors approved a quarterly cash dividend of 25 cents per share, payable on Oct 14, 2022, to all stockholders of record on Sep 15, 2022.  During the second quarter of 2022, Sonic repurchased around 1.4 million shares of its Class A Common Stock for an aggregate purchase price of nearly $59.4 million. It has increased its share repurchase authorization by $500 million, to a total of $633.1 million that is available.

Zacks Rank & Key Picks

SAH carries a Zacks Rank #3 (Hold), currently.

Better-ranked players in the auto space include Genuine Parts Company GPC, LCI Industries LCII and Standard Motor Products SMP, each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Genuine Parts has an expected earnings growth rate of 15.3% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 1.5% upward in the past 30 days.

Genuine Parts’ earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. GPC pulled off a trailing four-quarter earnings surprise of 11.03%, on average. The stock has risen 17% over the past year.

LCI Industries has an expected earnings growth rate of 65.9% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.

LCI Industries’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. LCII pulled off a trailing four-quarter earnings surprise of 21.81%, on average. The stock has declined 10.5% in the past year.

Standard Motor has an expected earnings growth rate of 5.2% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.

Standard Motor’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. SMP pulled off a trailing four-quarter earnings surprise of 40.34%, on average. The stock has risen 10.1% over the past year.


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