Share price of Sonic Automotive Inc. SAH increased 9.7% to $24.04 on Oct 28, after the company reported its third-quarter 2015 results. The company recorded adjusted earnings per share of 57 cents in third-quarter 2015, higher than the year-ago quarter figure of 46 cents. Earnings per share also surpassed the Zacks Consensus Estimate of 46 cents. Net income was $30.8 million compared with $24 million in the third quarter of 2014.
On a reported basis, Sonic Automotive’s earnings from continuing operations stood at $27.1 million or 53 cents per share, up from $24.6 million or 47 cents per share in the prior-year quarter. The company benefited from an overall increase in retail sales and its focus on providing customers with an outstanding buying and servicing experience.
Total revenue in the quarter rose 5.9% year over year to $2.49 billion. Moreover, the figure outpaced the Zacks Consensus Estimate of $2.42 billion. The year-over-year improvement was driven by solid performance across most business operations of the company.
Revenues from new vehicles improved 3% to $1.37 billion, while revenues from used vehicles increased 11.7% to $652.1 million in the quarter. Wholesale vehicle revenues fell 8.4% to $38 million. Revenues from parts, service and collision repair rose 7.6% to $350.5 million, while finance, insurance and other revenues grew 11.4% to $85.8 million.
Gross profit improved 5.5% to $360.3 million in the reported quarter from $341.5 million a year ago. Selling, general and administrative expenses increased 3.7% to $280 million. Moreover, operating income improved 10.6% to $62.9 million (2.5% of sales) from $56.9 million (2.4% of sales) in the third quarter of 2014.
Dividend Update
The board of directors of Sonic Automotive approved a quarterly dividend of 3.75 cents per share. The dividend will be paid on Jan 15, 2016, to shareholders on record as of Dec 15, 2015.
Business Update
Sonic Automotive is optimistic about its EchoPark stores. EchoPark stores retail sales increased 4.4% sequentially to 920 units. The company will open two additional stores in the Denver market in the first half of 2016. It also plans to acquire property in two additional markets in order to accelerate the EchoPark rollout in 2016 and 2017.
Charlotte, NC-based Sonic Automotive is a Fortune 500 company and one of the prominent automotive retailers in the U.S. The company currently sports a Zacks Rank #1 (Strong Buy).
Stocks to Consider
Other favorably ranked automobile stocks include General Motors Company GM, Superior Industries International, Inc. SUP and Lithia Motors Inc. LAD. All these stocks carry a Zacks Rank #2 (Buy).
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