Price: $14.28Forward P/E: 9Earnings Growth: 36%Projected Sales Growth: 12.4%Market Cap: $758 millionWhy It's Featured: Notable earnings growth; current auto resurgence; high Return on Equity.Danger Zones: Highly leveraged; volatile stock price; low profit margin.Sonic
Automotive, Inc. (NYSE: SAH) operates as an automotive retailer in the United States. It engages in the sale of new and used cars, light trucks, and replacement parts; provision of vehicle maintenance, warranty, paint, and repair services; and arrangement of extended service contracts, financing, insurance, and other aftermarket products. As of June 30, 2011, the company operated 136 dealership franchises at 119 dealership locations representing 30 brands of cars and light trucks, as well as 24 collision repair centers in 15 states. The company was founded in 1997 and is based in Charlotte, North Carolina.One thing stands out about
Sonic: its stock went from $33.10 to $1.40 within a 2 year period ('07 and '08). For some readers, that's enough. They'll go to the next site. But for aggressive investors looking for a turnaround story, there's more to know about SAH.First, earnings are coming back strong. While they were down noticably from '08 to '09 (68 cents from $1.05), they rebounded last year to 99 cents. This year, 8 analysts have a consensus estimate of $1.35, then project $1.57 for 2012. For the third quarter, earnings were 33 cents. Analysts had 31 cents as their estimate. Actual numbers have beaten estimates for the last 4 quarters: 15.4%; 4%; 2.8%; and 6.5% respectively. Fourth quarter earnings are pegged at 37 cents compared to last year's 30 cents in the final period.During the third quarter, sales rose by 13%, pushed higher by improving auto sales. Earnings went up even more, by 20%, driven by more parts sales, new auto sales, and financing. Many of the auto brands Sonic sells are in the luxury class, ones like Audi, BMW, Lexus, Jaguar, ...
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