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Is a Beat in Store for Sonic Automotive's (SAH) Q4 Earnings?

Zacks Equity Research

Sonic Automotive SAH is set to release fourth-quarter 2019 results on Feb 19, 2020, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter is a profit of 89 cents per share on revenues of $2.8 billion.

Sonic Automotive, one of the largest retailers of the world, reported better-than-expected results in third-quarter 2019, primarily amid solid contribution from the used-vehicle segment. As far as earnings surprises are concerned, the company displays an excellent record of surpassing estimates in the trailing four quarters, with an average positive surprise of 31.6%.

Sonic Automotive, Inc. Price and EPS Surprise

 

Sonic Automotive, Inc. Price and EPS Surprise
Sonic Automotive, Inc. Price and EPS Surprise

Sonic Automotive, Inc. price-eps-surprise | Sonic Automotive, Inc. Quote

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Investors are expecting an earnings beat for Sonic Automotive this time as well. Encouragingly, our model also indicates the same.

Trend in Estimate Revision

The Zacks Consensus Estimate for fourth-quarter earnings per share has been upwardly revised by a penny in the past 30 days. However, it indicates a 17.1% increase from the year-ago reported earnings of 76 cents per share. The Zacks Consensus Estimate for revenues also indicates year-over-year growth of 7.4%.

Factors at Play

The company’s EchoPark brand of standalone used-vehicle stores is likely to have positively impacted top-line growth in the to-be-reported quarter. Sonic Automotive’s focus on store expansions, customer-centric shopping experience and high-quality vehicle offerings are expected to have contributed to revenue growth of the firm. In addition to the company’s EchoPark unit, Sonic’s new vehicle franchise business is also anticipated to have witnessed growth and reaped benefits from strategic acquisitions.

Nonetheless, it is to be noted that the firm is bearing the brunt of high SG&A costs over the last several quarters. However, it is expected that solid performance from its used vehicle segment, particularly the EchoPark business, might have offset the high costs in the quarter to be reported.

Earnings Whispers

Our proven model predicts an earnings beat for Sonic Automotive this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Sonic Automotive has an Earnings ESP of +3.96% and a Zacks Rank #3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Here are some other auto stocks, which, according to our model, have the right combination of elements to post an earnings beat in the to-be-reported quarter.

LKQ Corporation LKQ is scheduled to report fourth-quarter results on Feb 20. The stock has an Earnings ESP of +1.68% and carries a Zacks Rank #3, currently.

Visteon Corporation VC is set to release quarterly numbers on Feb 20. The company has an Earnings ESP of +2.63% and carries a Zacks Rank of 3, at present.

Magna International Inc. MGA has an Earnings ESP of +3.34% and is a Zacks #3 Ranked player. The company is slated to report quarterly results on Feb 21.

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