Why Sonic Automotive’s next earnings report is drawing fresh attention

Sonic Automotive (SAH) is back in focus after analysts recently trimmed their consensus earnings forecast ahead of the company’s February 18 quarterly report, following a mixed pattern of estimate surprises over the last four releases.

The share price has eased back to US$60.11, with a 1-day share price return of a 1% decline and a 30-day share price return of a 4.7% decline. The 1-year total shareholder return of a 16.4% decline contrasts with a 5-year total shareholder return of 60.7%, suggesting shorter term momentum has faded even though longer term holders still sit on gains.

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With the share price under pressure and Sonic Automotive trading at a reported intrinsic discount of about 33%, the key question is whether this signals mispricing or whether the market is already factoring in future growth expectations.

Most Popular Narrative: 22.5% Undervalued

With Sonic Automotive last closing at $60.11 against a widely followed fair value of $77.60, the prevailing narrative sees meaningful upside still on the table, built on steady medium term assumptions rather than aggressive bets.

Expansion and enhancement of EchoPark Sonic's used vehicle platform is positioned to capitalize on the growing U.S. vehicle parc and a high growth, higher margin used car market; improved access to lease returns in 2026-2028 is expected to drive volume and earnings growth at EchoPark, directly boosting overall company revenue and EBITDA.

Curious what underpins that fair value gap? The narrative leans on measured revenue growth, fatter margins, and a lower future earnings multiple than many peers usually enjoy.

Putting it all together, the most followed view prices Sonic Automotive using a discount rate of 12.5%, modest long run revenue growth and a net margin assumption that stays close to recent levels. It also builds in a lower P/E multiple in a few years than the current Specialty Retail average, which keeps the valuation grounded rather than blue sky. The result is a fair value mark of $77.60 that sits comfortably above today’s share price yet rests on relatively consistent inputs rather than big upgrades.

Result: Fair Value of $77.60 (UNDERVALUED)

However, there are still clear watchpoints, including pressure from direct-to-consumer and digital competitors, as well as the risk that EV adoption reshapes high margin service revenue.

Build Your Own Sonic Automotive Narrative

If this story does not quite match your own view, or you would rather test the numbers yourself, you can build a custom Sonic Automotive thesis in just a few minutes, starting with Do it your way.

A great starting point for your Sonic Automotive research is our analysis highlighting 5 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.