Sonic Automotive Inc.SAH

Morningstar Rating

Stock Research and Analysis

by David Whiston, CPA, CFE

Sonic Automotive is undergoing several changes. Over the years, it has altered its acquisition strategy to be more disciplined, has increased its product mix toward the more lucrative luxury and import brands, and is nearly finished installing a dealer-management Read more

Bulls Say

Auto dealerships are well-diversified businesses that have lucrative parts and servicing operations, which help them be profitable in almost any environment.

Sonic's used-vehicle strategy will leverage information technology to sell used cars at a higher price than the company has previously received for them.

Sonic's Detroit Big Three exposure is less than that of some other publicly traded dealer firms. Read more

Bears Say

Dealerships are prone to macroeconomic cycles, and U.S. auto sales are in a significant downturn.

The chairman and CEO of Sonic is also chairman and CEO of Speedway Motorsports, which raises questions as to how he can give his best effort to Sonic while running two companies.

The chairman and CEO and his son have about 80% voting power, so other shareholders are effectively just along for the ride.

Franchise agreements with manufacturers could cap the number of dealerships a single company can own, or the manufacturers may be able to break contracts if Sonic were to be acquired or restructured. Read more

Strategy

A few years ago, management decided to slow its acquisition pace in order to better integrate existing stores. Previously, Sonic was buying stores just for the sake of expanding rather than because they Read more

Management

Chairman and CEO Bruton Smith, 82, is also the controlling stockholder and chairman and CEO of Speedway Motorsports TRK, which owns and operates a number of NASCAR tracks. His son, president and chief strategic officer B. Scott Smith, 41, has spent Read more

Profile

Sonic Automotive is the third-largest auto dealership group in the United States. The company has 131 stores in 15 states, primarily in metropolitan areas. In addition to Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

Dollar General Stock May Lose a Few Cents
Watch more