Benzinga - by Benzinga Insights, Benzinga Staff Writer.
On May 15, a recent SEC filing unveiled that David B. Smith, Chairman and CEO at Sonic Automotive (NYSE:SAH) made an insider sell.
What Happened: According to a Form 4 filing with the U.S. Securities and Exchange Commission on Wednesday, Smith sold 16,646 shares of Sonic Automotive. The total transaction value is $988,104.
During Thursday's morning session, Sonic Automotive shares down by 0.0%, currently priced at $59.59.
Get to Know Sonic Automotive Better Sonic Automotive is one of the largest auto dealership groups in the United States. The company has 108 franchised stores in 18 states, primarily in metropolitan areas in California, Texas, and the Southeast, plus 25 EchoPark used-vehicle stores, 16 collision centers, and 13 powersports locations. The franchise stores derive revenue from new and used vehicles plus parts and collision repair, finance, insurance, and wholesale auctions. Luxury and import dealerships make up about 86% of franchise new-vehicle revenue, while Honda, BMW, Mercedes, and Toyota constitute about 58% of new-vehicle revenue. BMW is the largest brand at about 25%. 2023's revenue was $14.4 billion, with EchoPark's portion totaling $2.4 billion. Sonic bought RFJ Auto in December 2021, which added $3.2 billion in sales.
Financial Milestones: Sonic Automotive's Journey Revenue Challenges: Sonic Automotive's revenue growth over 3 months faced difficulties. As of 31 March, 2024, the company experienced a decline of approximately -3.07%. This indicates a decrease in top-line earnings. As compared to its peers, the revenue growth lags behind its industry peers. The company achieved a growth rate lower than the average among peers in Consumer Discretionary sector.
Navigating Financial Profits:
- Gross Margin: With a low gross margin of 15.85%, the company exhibits below-average profitability, signaling potential struggles in cost efficiency compared to its industry peers.
- Earnings per Share (EPS): Sonic Automotive's EPS is below the industry average. The company faced challenges with a current EPS of 1.24. This suggests a potential decline in earnings.
Evaluating Valuation:
- Price to Earnings (P/E) Ratio: With a lower-than-average P/E ratio of 12.21, the stock indicates an attractive valuation, potentially presenting a buying opportunity.
- Price to Sales (P/S) Ratio: With a lower-than-average P/S ratio of 0.15, the stock presents an attractive valuation, potentially signaling a buying opportunity for investors interested in sales performance.
- EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): At 10.5, Sonic Automotive's EV/EBITDA ratio reflects a below-par valuation compared to industry averages signalling undervaluation
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Uncovering the Importance of Insider Activity While insider transactions should not be the sole basis for making investment decisions, they can play a significant role in an investor's decision-making process.
Considering the legal perspective, an "insider" is defined as any officer, director, or beneficial owner holding more than ten percent of a company's equity securities, according to Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and major hedge funds. These insiders are mandated to disclose their transactions through a Form 4 filing, to be submitted within two business days of the transaction.
Pointing towards optimism, a company insider's new purchase signals their positive anticipation for the stock to rise.
Nevertheless, insider sells may not necessarily indicate a bearish view and can be influenced by various factors.
Transaction Codes Worth Your Attention Taking a closer look at transactions, investors often prioritize those unfolding in the open market, meticulously cataloged in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C denotes the conversion of an option, and transaction code A signifies a grant, award, or other acquisition of securities from the company.
Check Out The Full List Of Sonic Automotive's Insider Trades.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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