Sonic Automotive, Inc. (SAH)
Valuation Overview•Is Sonic Automotive, Inc. Overvalued or Undervalued?
Trading at a relative discount to industry peers, suggesting a specific risk premium is applied.
Fragile underlying quality score of 36/100; weak margins or elevated debt leverage warrant caution.
Analysts remain cautious, with consensus price targets indicating limited room for upside expansion.
Verdict: Mixed fundamental profile with offsetting strengths and weaknesses.
Wall Street is cautious, forecasting potential downside alongside robust expected earnings growth. This is paired with healthy capital returns, driven by a balanced mix of reliable dividends and share buybacks.
SAH struggles with subpar profitability and pressured margins. However, this is severely offset by a highly leveraged balance sheet (Debt/EBITDA > 4.0x) and elevated financial risk.
The company exhibits steady, low-single-digit revenue growth paired with robust earnings compounding (15.3% EPS 3Y CAGR). However, profitability remains a major concern with severely compressed operating margins (3.6%).
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $3.9B | +6.5% | +2.7% | +9.2% | +4.6% | |
| EBITDA | $165.0M | — | -2.6% | — | — | |
| Net Income | $46.9M | -45.0% | +10.3% | — | +3.2% | |
| EPS (Diluted) | $1.36 | -44.7% | +15.3% | — | +7.2% | |
| Free Cash Flow | $29.6M | +566.0% | +39.5% | -0.6% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 14.6% | 14.5% | 14.8% | 14.3% |
| Operating Margin | 3.6% | 3.5% | 3.9% | 3.2% |
| Net Margin | 0.8% | 1.2% | 1.4% | 1.0% |
| FCF Margin | 2.8% | 0.1% | 1.1% | 1.0% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $1.46 | $1.62 | +11.0% | ||
| Q1'26 | $1.53 | $1.52 | -0.7% | ||
| Q4'25 | $1.82 | $1.41 | -22.5% | ||
| Q3'25 | $1.63 | $2.19 | +34.4% | ||
| Q2'25 | $1.46 | $1.48 | +1.4% | ||
| Q1'25 | $1.46 | $1.51 | +3.4% | ||
| Q4'24 | $1.42 | $1.26 | -11.3% | ||
| Q3'24 | $1.38 | $1.47 | +6.5% |
Total return is +6.0% (1Y), lagging the benchmark by -19.0%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +32.3% | +22.9% | — |
| 1Y | +6.0% | -19.0% | +2.0% |
| 3YCAGR | +22.8% | +2.0% | +8.9% |
| 5YCAGR | +14.6% | +1.3% | +13.5% |
| 10YCAGR | +17.3% | +3.5% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Sonic Automotive, Inc. (SAH) valuation, health, and returns.
Sonic Automotive, Inc. is estimated to be fairly valued under our discounted cash flow framework. relative multiples indicate the stock is Slightly cheap versus peers compared to industry peers. trading near fair value (DCF: $0.00)
Sonic Automotive, Inc. has multiple valuation anchors: DCF Intrinsic Value: $0.00 | Peer Relative Fair Value: $93.41 | Wall Street Analyst Target: $76.50 (implying -5.2% upside). A convergence of these signals offers higher conviction.
Sonic Automotive, Inc. displays weak financial health with a composite quality score of 36/100, supported by a Altman Z-Score of 3.1 (safe zone), Piotroski F-Score of 6/9, Return on Invested Capital (ROIC) of 7.8%.
Sonic Automotive, Inc. pays a 1.7% dividend yield, covered by a 41% payout ratio with 5 years of growth, supplemented by a 3.0% buyback yield.
Sonic Automotive, Inc.'s current growth trajectory is Accelerating. The company achieved +6.5% 1Y revenue growth and -44.7% 1Y EPS growth, compared to its 3Y revenue CAGR of +2.7%.
Wall Street consensus is Hold based on 16 analysts, beating EPS expectations in 67% of recent quarters with a 1-quarter streak. The consensus price target represents a -5.2% change from current levels.
Investment risks for Sonic Automotive, Inc. include: -32.8% 1-year max drawdown. Volatility risk is characterized by a beta of 1.02x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.