It has been about a month since the last earnings report for Sonic Automotive (SAH) . Shares have lost about 5.5% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Sonic Automotive due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.Sonic Q4 Earnings Miss Expectations, Revenu ...

Core Viewpoint - Lithia Motors has experienced a decline in share price by approximately 16% since its last earnings report, underperforming the S&P 500, raising questions about its future performance leading up to the next earnings release [1] Financial Performance - Lithia reported Q4 2025 adjusted earnings per share of $6.74, a decrease from $7.79 in the prior-year quarter, missing the Zacks Consensus Estimate of $8.09 [2] - Revenues for the quarter were $9.2 billion, flat year over year, and also missed the Zacks Consensus Estimate of $9.53 billion [2] Segmental Performance - New vehicle revenues fell by 5.7% year over year to $4.63 billion, missing the estimate of $4.71 billion, with new vehicle units sold declining by 8.1% to 97,424 units, although this was above the estimate of 95,435 units [3] - The average selling price (ASP) of new vehicles increased to $48,239 from $47,478 in the prior-year quarter but fell short of the estimate of $49,401, with gross margin contracting by 70 basis points to 5.9% [4] - Used vehicle revenues rose by 6.7% year over year to $3.2 billion, surpassing the estimate of $2.68 billion, driven by higher unit sales and ASP, with used vehicle retail units sold increasing by 4.8% to 99,905 units [5] - The ASP of used vehicles was $28,533, up 3.1% year over year, exceeding the estimate of $28,413, although gross margin decreased by 60 basis points to 4.7% [5] - Finance and insurance revenues increased by 0.3% to $356.9 million, beating the estimate of $347 million, while aftersales revenues totaled $1.04 billion, up 11.4% year over year, also exceeding the estimate of $972.1 million [6] Cost and Expenses - Cost of sales increased by 0.3% year over year, while SG&A expenses rose by 8.6% to $979.3 million, with adjusted SG&A as a percentage of gross profit increasing to 71.4% from 66.3% in the prior-year quarter [7] Shareholder Returns - The company announced a dividend of 55 cents to be paid on March 20, 2026, to shareholders of record as of March 6, 2026, and repurchased nearly 917,427 shares at an average price of $314 [8] Financial Position - As of December 31, 2025, Lithia had cash and cash equivalents of $341.8 million, down from $402.2 million a year earlier, while long-term debt increased to $7.27 billion from $6.12 billion [9] Market Sentiment - Since the earnings release, there has been a flat trend in estimates review, indicating a lack of significant changes in market expectations [10] - Lithia Motors currently holds a Zacks Rank 3 (Hold), suggesting an expectation of an in-line return from the stock in the coming months [13]

Core Insights - Sonic Automotive, Inc. (SAH) reported fourth-quarter 2025 adjusted earnings per share of $1.52, a 1% increase year over year, but below the Zacks Consensus Estimate of $1.53. Total revenues decreased by 1% year over year to $3.87 billion, missing the consensus estimate of $3.91 billion [1][9]. Revenue Breakdown - Revenues from new vehicles totaled $1.88 billion, down 4% year over year. Used-vehicle revenues increased by 1% to $1.21 billion, while wholesale vehicle revenues declined by 11% to $63.6 million. Revenues from parts, service, and collision repair rose by 8% to $515.3 million. Finance, insurance, and other revenues grew by 6% year over year to $202.3 million. Total gross profit increased by 4% to $598.7 million [2]. - In the Franchised Dealerships segment, new-vehicle revenues were $1.86 billion, down 4% year over year. Used-vehicle revenues rose by 6% to $799.7 million, while wholesale vehicle revenues declined by 16% to $41.8 million. Revenues from parts, service, and collision repair increased by 8% to $507.8 million, and finance, insurance, and other revenues climbed by 6% to $149.1 million. Same-store revenues fell by 5% year over year to $3.19 billion, with same-store retail new and used vehicle units declining by 4% to 55,122 [3]. - The EchoPark segment reported revenues of $480.7 million, down 5% year over year. Used-vehicle sales contributed $407.5 million, declining by 7%, while wholesale vehicle revenues edged up by 0.5% to $21.5 million. Finance, insurance, and other revenues increased by 6% to $51.7 million. EchoPark sold 15,743 used vehicles, down 6% year over year, and 2,365 wholesale vehicles, down 14% compared to the prior-year period [4]. - In the Powersports segment, new-vehicle revenues rose by 17% year over year to $20.4 million, while used-vehicle revenues increased by 40% to $6.6 million. Wholesale vehicle revenues surged by 300% to $0.4 million. Revenues from parts, service, and collision repair climbed by 7% to $7.5 million, and finance, insurance, and other revenues totaled $1.5 million. Same-store revenues increased by 17% to $33.4 million, with same-store retail new and used vehicle units growing by 16% year over year to 1,584 [5]. Financial Metrics - Selling, general, and administrative (SG&A) expenses declined by 9% year over year, accounting for 72.4% of gross profit. Cash and cash equivalents were $6.3 million as of December 31, 2025, down from $44 million as of December 31, 2024. Long-term debt increased to $1.62 billion as of December 31, 2025, up from $1.59 billion as of December 31, 2024 [6]. - During the fourth quarter, Sonic Automotive repurchased approximately 0.6 million shares for $38.3 million. For the full year 2025, the company bought back roughly 1.3 million shares for a total of approximately $82.4 million. A quarterly dividend of 38 cents per share was announced, to be paid on April 15, 2026, to stockholders of record as of March 13, 2026 [7]. Future Guidance - For 2026, in the Franchised Dealerships Segment, Sonic expects new vehicle gross profit per unit (GPU) in the range of $2,700 to $3,000, and used vehicle GPU anticipated in the range of $1,300 to $1,400. The company expects finance and insurance GPU in the range of $2,600 to $2,700 per unit [8]. - In the EchoPark Segment, adjusted EBITDA is expected to be between $25 million and $35 million, with total GPU anticipated in the range of $3,400 to $3,600 per unit. In the Powersports Segment, adjusted EBITDA is expected to be between $12 million and $15 million. Sonic Automotive sees FY26 SG&A in the low-70% range, with floor plan interest set to rise about 10% and tax rate projected in the band of 28-29% [10].

Sonic Automotive, Inc. Q4 2025 Earnings Call Summary - Moby Strategic Performance Drivers and Market Dynamics Record customer satisfaction and high-margin business lines, specifically F&I and fixed operations, now contribute over 75% of total franchise gross profit. New vehicle retail volume faced significant headwinds due to the pull-forward of EV demand prior to tax credit expirations and a high luxury comparison base from the prior year. Management attributes EchoPark's record adjusted EBITDA to ...

Core Insights - Sonic Automotive reported $3.87 billion in revenue for the quarter ended December 2025, reflecting a year-over-year decline of 0.6% and an EPS of $1.52, slightly up from $1.51 a year ago, with revenue falling short of the Zacks Consensus Estimate by 1.04% [1] Group 1: Financial Performance - The revenue of $3.87 billion represents a surprise of -1.04% compared to the Zacks Consensus Estimate of $3.91 billion [1] - The EPS of $1.52 was below the consensus estimate of $1.53, resulting in an EPS surprise of -0.44% [1] - Sonic Automotive's shares have returned -6.6% over the past month, underperforming the Zacks S&P 500 composite's -1.3% change [3] Group 2: Segment Performance - Franchised Dealerships Segment reported total new vehicle sales of 29,858, below the average estimate of 31,263 [4] - Used vehicle sales in the Franchised Dealerships Segment were 27,401, exceeding the average estimate of 25,579 [4] - EchoPark Segment's used vehicle sales were 15,743, slightly below the average estimate of 16,138 [4] - Revenues from the EchoPark Segment were $480.7 million, compared to the average estimate of $481.8 million, representing a year-over-year decline of 5% [4] - Revenues from Franchised Dealerships were $3.35 billion, surpassing the average estimate of $3.32 billion, with a year-over-year change of -0.1% [4] - Used vehicle revenues in the Franchised Dealerships Segment were $799.7 million, exceeding the estimate of $782.96 million, marking a 5.6% increase year-over-year [4] - Parts, service, and collision repair revenues in the Franchised Dealerships Segment were $507.8 million, slightly above the estimate of $507.18 million, with an 8.1% year-over-year increase [4] - Finance, insurance, and other net revenues in the Franchised Dealerships Segment were $149.1 million, exceeding the estimate of $145.64 million, reflecting a 6.1% year-over-year increase [4] - EchoPark Segment's used vehicle revenues were $407.5 million, below the estimate of $415.61 million, representing a 6.5% year-over-year decline [4] - Finance, insurance, and other net revenues in the EchoPark Segment were $51.7 million, compared to the estimate of $54.47 million, showing a 5.9% year-over-year increase [4] - Powersports Segment revenues were $36.4 million, exceeding the estimate of $32.29 million, with a year-over-year increase of 19% [4]

SONIC AUTOMOTIVE Investor Presentation | Fourth Quarter 2025 Updated February 18, 2026 Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events, are not historical facts and are based on our current expectations and assumptions regarding our business, the economy and other future conditions. These statements can generally be identified by lead-in words such as "may," ...

Core Insights - The company experienced varied performance across brands, with luxury brand revenue declining by 12.7% year over year, influenced by challenging prior-year comparisons and weak sales promotions late in the quarter [1] - Same-store revenues were flat, and gross profit decreased by 1.2%, reflecting strong execution relative to market conditions [2] - The company achieved record revenues of $9.2 billion in the fourth quarter, contributing to a full-year revenue of $37.6 billion, which is a 4% increase from the previous year [4] Revenue and Profitability - New vehicle revenue declined by 6.6% due to an 8.3% unit decline as industry demand softened and supply normalized, with new vehicle gross profit per unit (GPU) at $2,760, down $300 year over year [2] - Used vehicle revenue increased by 6.1%, driven by a 4.7% unit growth, while used GPU was $1,575, down $151 year over year [5] - Aftersales revenue grew by 10.9%, with gross profit increasing by 9.8%, resulting in a gross margin of 57.3% [7] Operational Efficiency - The company is focusing on improving market share and volume to enhance profitability, with a strategy to reduce selling, general, and administrative (SG&A) expenses while increasing dynamic pricing [3][8] - Inventory levels remained stable, with new vehicle day supply at 54 days and used inventory at 40 days, contributing to lower floor plan interest costs [7] - The company is investing in technology to enhance operational efficiency, including AI-powered solutions and a new dealer management system [10][22] Financing Operations - Driveway Finance Corporation (DFC) reported record income with a managed receivables portfolio of $4.8 billion, up 23% year over year, and a net interest margin of 4.8% [24] - DFC's penetration rate reached 15% for the quarter, up 650 basis points, indicating strong growth potential [24] - The company aims for a long-term target of 20% penetration for DFC, which will enhance recurring income streams [11] Capital Allocation - The company repurchased 3.8% of its shares in the quarter and 11.4% of its shares in the previous year, focusing on maximizing shareholder returns through disciplined capital deployment [12][27] - A balanced capital strategy will be maintained, prioritizing share buybacks, selective acquisitions, and organic investments [28][29] - The company aims to acquire $2 billion to $4 billion in annualized revenues, targeting high-return acquisitions to strengthen its market position [16] Future Outlook - The company is positioned for compounding earnings growth in 2026 as industry conditions normalize, with a focus on increasing profitability and expanding its digital reach [13][30] - Strategic acquisitions remain a core pillar, with a goal to triple revenue while maintaining consistent EPS growth [14][15] - The company anticipates mid-single-digit growth in aftersales and aims to improve used vehicle pricing strategies to enhance GPU [56][50]

Financial Data and Key Metrics Changes - The company achieved record revenues of $9.2 billion in Q4, contributing to a full-year revenue of $37.6 billion, which is a 4% increase from 2024 [5] - Adjusted diluted EPS for Q4 was $6.74, with a full-year adjusted EPS of $33.46, reflecting a 16% increase from 2024 [5] - Adjusted EBITDA for Q4 was $364.1 million, an 8.9% decrease year-over-year, primarily due to lower net income [23] Business Line Data and Key Metrics Changes - New vehicle revenue declined by 6.6% due to an 8.3% unit decline, with new vehicle GPU at $27.66, down $300 year-over-year [8] - Used retail performance showed a 6.1% revenue increase, driven by 4.7% unit growth, with used GPU at $1,575, down $151 year-over-year [8] - After-sales revenue grew by 10.9%, with gross profit up 9.8% and a gross margin of 57.3% [10] Market Data and Key Metrics Changes - In the UK, same-store gross profit increased by 10% despite challenging market conditions, with adjusted pre-tax income up 53% for the full year compared to 2024 [11] - North American penetration for Driveway Finance Corporation (DFC) reached 15% for the quarter, up 650 basis points [22] Company Strategy and Development Direction - The company is focused on maximizing shareholder returns through disciplined capital deployment, including share repurchases and strategic acquisitions [13] - The strategy includes growing after-sales profitability, expanding DFC penetration, and improving operational efficiencies [14] - The company aims for a long-term target of $2 of EPS per $1 billion of revenue, emphasizing the importance of increasing market share and optimizing capital structure [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging environment with margin compression and SG&A de-leverage impacting earnings [18] - The company is optimistic about future growth, expecting compounding earnings growth in 2026 as industry conditions normalize [15] - Management highlighted the importance of improving market share and volume to enhance profitability [19] Other Important Information - The company repurchased 3.8% of its shares in Q4 and 11.4% of its shares in 2025, indicating a commitment to returning capital to shareholders [24] - The partnership with Pinewood AI is expected to enhance operational efficiency and customer experience [12] Q&A Session Summary Question: How much of the after-sales growth is tied to extended service contracts? - Management indicated that retention levels are slightly up year-over-year, with service contract penetration at 37% and lifetime oil at just under 20% [30] Question: Will the focus on returning cash to shareholders shift in the coming years? - Management stated that as long as the stock price remains undervalued, share repurchases will continue to be prioritized [33] Question: What drove the higher SG&A as a percentage of gross profit in Q4? - Management noted that weaker sales in December led to increased SG&A, as marketing budgets were pushed without the expected sales materializing [38] Question: What are the trends in the used vehicle market? - Management observed that the used vehicle market is beginning to strengthen, with a focus on affordability and inventory turnover [87] Question: Are there plans to offer Chinese brands in the U.S.? - Management confirmed ongoing relationships with Chinese manufacturers in the UK but expressed caution about entering the U.S. market due to the lack of established service and parts business [90]

Financial Data and Key Metrics Changes - The company achieved record revenues of $9.2 billion in Q4, contributing to a full-year revenue of $37.6 billion, which is a 4% increase from 2024 [5] - Adjusted diluted EPS for the quarter was $6.74, with a full-year adjusted EPS of $33.46, reflecting a 16% increase from 2024 [5][7] - Adjusted EBITDA for Q4 was $364.1 million, an 8.9% decrease year-over-year, primarily due to lower net income [23] Business Line Data and Key Metrics Changes - New vehicle revenue declined by 6.6% due to an 8.3% unit decline, with new vehicle GPU at $27.66, down $300 year-over-year [8] - Used retail performance showed a 6.1% revenue increase, driven by 4.7% unit growth, with used GPU at $1,575, down $151 year-over-year [8][10] - After-sales revenue grew by 10.9%, with gross profit up 9.8% and a gross margin of 57.3% [10] Market Data and Key Metrics Changes - In the U.K., same-store gross profit increased by 10% despite challenging market conditions, with adjusted pre-tax income up 53% for the full year compared to 2024 [11] - North American penetration for Driveway Finance Corporation (DFC) reached 15% for the quarter, up 650 basis points [22] Company Strategy and Development Direction - The company is focused on maximizing shareholder returns through disciplined capital deployment, including share repurchases and selective M&A [13][24] - Strategic acquisitions remain a core pillar, with a target of $2-$4 billion in acquired revenue annually [16] - The company aims to improve operational efficiency and customer experiences through technology investments, including AI-powered solutions [20][21] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment is challenging, with year-over-year earnings pressure from margin compression and SG&A de-leverage [18] - The company is optimistic about future growth, expecting compounding earnings growth in 2026 as industry conditions normalize [15][25] - Management emphasized the importance of growing market share and volume to drive profitability [19] Other Important Information - The company repurchased 3.8% of its shares in Q4 and 11.4% of its shares in 2025 at an average price of $314 [23][24] - DFC reported a financing operations income of $23 million in Q4, bringing full-year income to $75 million, an increase of $67 million from the prior year [21] Q&A Session Summary Question: What is the growth tied to extended service contracts in after-sales? - Management indicated that retention levels are slightly up year-over-year, with service contract penetration at 37% [28][30] Question: Will the cash return strategy change in the coming years? - Management stated that if stock prices increase relative to acquisitions, it may shift, but currently, share repurchases are prioritized due to attractive valuations [31] Question: What drove the higher SG&A as a percentage of GP in Q4? - Management explained that weaker sales in December led to increased SG&A, as marketing budgets were pushed without the expected sales materializing [36][38] Question: What are the trends in the used vehicle market? - Management noted that trends in the used vehicle market are similar to Q4, with expectations for improvement as the market strengthens [84][86] Question: Are there plans to offer Chinese brands in the U.S.? - Management mentioned ongoing relationships with Chinese manufacturers in the U.K. but expressed caution about entering the U.S. market due to the lack of existing units in operation [89][90]

Core Insights - AutoNation, Inc. reported fourth-quarter 2025 adjusted earnings of $5.08 per share, a 2% increase year over year, surpassing the Zacks Consensus Estimate of $4.91. However, revenues of $6.93 billion fell short of the Zacks Consensus Estimate of $7.14 billion and declined from $7.21 billion in the fourth quarter of 2024 [2][11]. Revenue Breakdown - New vehicle revenues decreased by 8.8% year over year to $3.44 billion, missing the estimate of $3.64 billion due to lower sales volume. Retail units sold were 64,841, down 9.2% year over year, and also below the projection of 73,642 units [3][11]. - The average selling price (ASP) per new vehicle unit was $53,073, a 0.4% increase year over year, exceeding the estimate of $49,384. However, gross profit from this segment fell by 26.7% year over year to $155.5 million, missing the estimate of $171.1 million [4][11]. - Retail used-vehicle revenues reached $1.76 billion, surpassing the projection of $1.71 billion, despite a 2.9% year-over-year decline in used vehicle retail units sold to 62,926, which missed the estimate of 66,669 units. The ASP per used vehicle was $27,933, up 3% year over year, exceeding the estimate of $25,669. Gross profit from this segment fell by 9.2% year over year to $90.5 million, missing the estimate of $97.5 million [5][11]. - Wholesale used vehicle revenues dropped by 13.1% to $133.2 million, missing the estimate of $150.5 million. Gross profit increased to $7.3 million from $4.7 million, matching the estimate [6]. - Finance and insurance business revenues were $369.4 million, a 0.9% increase year over year, but below the projection of $370.4 million. Gross profit was also $369.4 million, matching the year-over-year increase but missing the estimate [6]. - Parts and service revenues rose by 6.1% to $1.22 billion, although it missed the estimate of $1.23 billion. Gross profit from this segment increased by 6% year over year to $591.8 million, beating the estimate of $577.2 million [7]. Segment Performance - Domestic segment revenues increased by 1.2% year over year to $1.89 billion, missing the projection of $1.91 billion. The segment's income rose by 19.3% to $79.9 million but fell short of the estimate of $85.2 million [8]. - Import segment revenues decreased by 2.7% year over year to $2.05 billion, missing the forecast of $2.19 billion. The segment's income declined by 11.4% to $106.8 million, lagging behind the estimate of $136.7 million [8]. - Premium Luxury segment sales fell by 8.9% to $2.64 billion, matching the projection. The segmental income declined by 20.3% year over year to $165.4 million, missing the estimate of $196.1 million [9]. Financial Position - As of December 31, 2025, AutoNation's liquidity was $1.8 billion, including $59 million in cash and nearly $1.7 billion available under its revolving credit facility. The company's inventory was valued at $3.4 billion, and non-vehicle debt stood at $3.98 billion. Capital expenditure for the quarter was $86.3 million [12]. - During the quarter, AutoNation repurchased 1.7 million shares for $350 million, with $968 million remaining under its share repurchase program [12].