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Sonic Automotive (SAH) Up 3.6% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

A month has gone by since the last earnings report for Sonic Automotive (SAH). Shares have added about 3.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Sonic Automotive 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 drivers.

Sonic Automotive Q1 Earnings Top, Revenues Lag Estimates

Sonic Automotive registered adjusted earnings per share of 39 cents in first-quarter 2019, beating the Zacks Consensus Estimate of 22 cents. However, the bottom line was lower than the first-quarter 2018 figure of 26 cents per share.

Total revenues in the reported quarter were $2.39 billion, up from the prior-year quarter figure of $2.40 billion. However, revenues missed the Zacks Consensus Estimate of $2.41 billion.

During the reported quarter, revenues from the sale of total new vehicles decreased 9.7% year over year to $1.06 billion. Revenues from the sale of total used vehicles rose 15.7% to $820.4 million. Wholesale vehicle revenues declined 16.3% to $54.8 million.

Revenues from parts, services and collision repair decreased 2.9% to $341.4 million while finance, insurance and other revenues rose 13.4% to $106.2 million.

In first-quarter 2019, gross profit increased to $359 million from $352.5 million recorded a year ago. Selling, general and administrative expenses decreased to $247 million from $304.9 million in the year-ago quarter. The company reported operating income of $87.3 million compared with $20.2 million in the year-ago quarter.

In first-quarter 2019, EchoPark stores retailed 11,051 units, up 100.3% on a year-over-year basis.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 9.57% due to these changes.

VGM Scores

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

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Sonic Automotive has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.



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