Sonic Automotive Inc.
) recorded a 16% rise in adjusted earnings per share to 43 cents in
the second quarter of 2012 compared to 37 cents per share in the
corresponding quarter last year. With this, the profit surpassed
the Zacks Consensus Estimate of 41 cents per share. Meanwhile,
reported earnings from continuing operation were $27.5 million or
46 cents per share compared to $22.9 million or 38 cents per share.
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The company's total revenues for the quarter came in at $2,185.2
million, up 12.3% from $1,945.9 million in the year-ago quarter. It
marginally exceeded the Zacks Consensus Estimate of $2,168 million.
The increase in revenues was driven by higher revenues in all
businesses as well as improved unit sales of used vehicles.
Revenues from new vehicles retailed surged 21.3% to $1,176.8
million while revenues from used vehicle (retail and wholesale)
went up 4.2% to $594.0 million during the quarter. Revenues from
parts and service escalated 3.2% to $304.6 million and finance and
insurance business grew 18% to $65.3 million.
The company witnessed a 5% growth in gross profit to $320.7 million
in the quarter compared to $305.9 million a year ago. The rise in
profits was attributable to an increase in new and used vehicle
unit volumes along with better performance of the finance and
Selling, general and administrative expenses rose 5.2% to $249.5
million in the quarter. However, operating income was $59.8 million
or 2.7% of sales compared with $59.1 million or 3.0% of sales in
the second quarter of 2011.
The company's Board of Directors authorized an additional
repurchase of $100 million shares. As a result, the company has
approximately $130 million worth of shares remaining for
The Board of Directors of Sonic Automotive approved a quarterly
cash dividend of 25 cents per share. The dividend would be paid on
October 15, 2012 to the stockholders of record on September 14,
Charlotte, North Carolina-based Sonic Automotive is a Fortune 500
company. It is one of the largest automotive retailers in the U.S.
The company operates 100 dealerships spread across 15 states and 26
major metropolitan markets. It represents about 30 different
automotive brands with the majority of the dealerships being luxury
and import brands. It competes with
The company expects better performance in the future owing to its
investments in technology and training programs. Currently, it
retains a Zacks #3 Rank, which translates into a short-term (1 to 3
months) Hold rating. We have a long-term (more than 6 months)
Neutral recommendation on the stock.