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SAH

Sonic Automotive

$15.11

-0.74 (-4.67%)

07:33
02/20/19
02/20
07:33
02/20/19
07:33

Sonic Automotive CEO says 'we saw new car volume erode' in Q4

David Smith, Sonic's and EchoPark's CEO, commented, "We saw new car volume erode in the fourth quarter of 2018 versus the prior year quarter, driven by difficult year-over-year comparisons in Texas given Hurricane Harvey in 2017. We continue to outperform our internal targets on used vehicles and F&I which both posted records in the fourth quarter of 2018. Our EchoPark platform continues to grow at a rapid pace, up 95% in unit volume in the fourth quarter of 2018, compared to the prior year quarter. We expect to see new car volatility continue over the long term and believe EchoPark growth will add more stability to our future operations. We believe EchoPark will provide Sonic with diversification that will hedge the risk of new vehicle manufacturer driven swings in volume and incentives that can negatively affect the profitability of our franchise operations. We expect 2019 to be a challenging year, given new car volatility, but believe our used vehicle, fixed operations and F&I performance will more than offset this volatility. In addition, our EchoPark platform should significantly improve its profit performance in 2019." Jeff Dyke, Sonic's and EchoPark's President, commented, "I agree with David Smith's comments, and would add that our exposure to BMW and Honda, which make up on average 40% of our profits, makes it difficult when these brands have challenging years. I am also enthusiastic about our EchoPark performance and look forward to announcing even better results as we move into the next couple of quarters. We expect 2019 to be a very big year for the EchoPark brand. We successfully launched our Charlotte store in the fourth quarter of 2018, which was profitable in the month of December, its second full month of operation, and performed even better in January. Our Houston store opened on December 7, 2018 and was our best EchoPark store opening to date, selling 266 vehicles in the last three weeks of December and selling 373 vehicles in January. We expect Houston volume to continue climbing and ultimately operate in the volume range of our Dallas location, which sells nearly 1,200 vehicles a month. We expect the interest rate environment to remain challenging in 2019, anticipating several rate hikes. Given our luxury mix with higher than average inventory values, rising interest rates considerably erode our profitability. Accordingly, we are actively managing our inventory balances. Our days' supply numbers in both new and used vehicles were 59 days and 31 days, respectively, at the end of 2018. Given this challenging environment, we completed headcount reductions in the first quarter of 2019, reducing our corporate and regional staff by over 6%, and have identified additional savings opportunities to reduce costs in 2019 and will continue to search for additional cost savings measures throughout 2019." Heath Byrd, Sonic's and EchoPark's Executive Vice President and CFO, added, "Given the volatility in the new car market, coupled with our expansion options for EchoPark, we will discontinue our historical practice of providing annual earnings per share guidance. In addition, starting in the first quarter of 2019, we will report our results on a GAAP basis only."

  • 20

    Feb

SAH Sonic Automotive
$15.11

-0.74 (-4.67%)

03/14/18
MSCO
03/14/18
NO CHANGE
MSCO
Morgan Stanley raises U.S. auto sales forecasts through 2021
Morgan Stanley analyst Adam Jonas raised his U.S. seasonally adjusted annual rate, or SAAR, forecast for automakers by an average of 850,000 units from 2018 through 2021, which represents slightly more than a 5% increase from his prior forecast. However, his average U.S. SAAR forecast is still well below last year's 17.3M units and 8% under the cyclical high of 17.6M units in 2016. Jonas points to U.S. tax reform and "relatively stable" recent trends in auto sales and credit as reasons for the hike, noting that while infrastructure action from the federal government could be a material positive, it is not explicitly in his new forecast. Adding that the higher view has a net positive impact on estimates and price targets for exposed auto Original Equipment Manufacturers, or OEMs, and suppliers, Jonas raised his price targets on General Motors (GM), Asbury Automotive (ABG), AutoNation (AN), Group 1 Automotive (GPI), Lithia Motors (LAD), Penske Automotive (PAH), Sonic Automotive (SAH) and Ford (F). He also double upgraded Ford, to Overweight from Underweight, this morning.
07/10/18
MSCO
07/10/18
DOWNGRADE
MSCO
Underweight
AutoNation, Sonic Automotive double downgraded to Underweight at Morgan Stanley
Morgan Stanley analyst Armintas Sinkevicius double downgraded AutoNation (AN) and Sonic Automotive (SAH), each to Underweight from Overweight, as he took over coverage of the auto dealer stocks at the firm. Longer term, he is constructive on dealers, citing a belief that tech disruption could accelerate consolidation and set up a transition toward "megafleet managers." However, given that the market is over 9 years into the auto cycle, he sees limited potential for a re-rating of the multiples of auto dealer's stocks, Sinkevicius tells investors. In supporting his view, he notes that both stocks trade at a premium to the rest of the group. Sinkevicius also retains an Underweight rating on Group 1 Automotive (GPI) given its premium valuation.
02/19/19
JPMS
02/19/19
INITIATION
Target $14
JPMS
Underweight
Sonic Automotive initiated with an Underweight at JPMorgan
JPMorgan analyst Rajat Gupta started Sonic Automotive with an Underweight rating and $14 price target. The analyst initiated coverage on the U.S. Auto Dealership sector with a balanced view on the industry but a more constructive view on the stocks. However, he says Sonic has a "softer execution history and less relative balance sheet optionality" relative to peers.
02/19/19
02/19/19
INITIATION

Fly Intel: Top analyst initiations
Catch up on today's top analyst initiations with this list compiled by The Fly: 1. Southern Copper (SCCO) initiated with a Buy at Goldman Sachs. 2. Arcturus Therapeutics (ARCT) initiated with a Buy at Laidlaw. 3. HEXO Corp (HEXO) initiated with an Outperform at Oppenheimer. 4. Group 1 Automotive (GPI) and Lithia Motors (LAD) were initiated with an Overweight at JPMorgan, while Penske Automotive (PAG) and Asbury Automotive (ABG) were initiated with a Neutral, and Sonic Automotive (SAH) and AutoNation (AN) were initiated with an Underweight at JPMorgan. This list is just a portion of The Fly's analyst coverage. To see The Fly's full Street Research coverage, click here.

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KDMN

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RTN

Raytheon

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