Sonic Automotive (Come on – Free Report) reported quarterly earnings of $1.63 per share, missing the Zacks Consensus Estimate of $1.80 per share. This compares to his earnings per share of $2.61 a year ago. These figures have been adjusted for non-recurring items.
This quarterly report represents an earnings surprise of -9.44%. A quarter ago, it was expected that this auto dealer would post earnings of $1.80 per share when it actually produced earnings of $2.02, delivering a surprise of 12.22%.
Over the last four quarters, the company has surpassed consensus EPS estimates two times.
Sonic Automotive, which belongs to the Zacks Automotive – Retail & Wholesale Distribution industry, posted revenues of $3.58 billion for the quarter ended December 2023, beating the Zacks Consensus Estimate by 0.14%. This compares to revenue of $3.59 billion in the year-ago period. The company has surpassed consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's comments on the earnings call.
Sonic Automotive stock has risen about 2.2% since the beginning of the year, compared to the S&P 500's rise of 3.8%.
What's next for Sonic Automotive?
Sonic Automotive has underperformed the market so far this year, but the question that comes to investors' minds is: What's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Prior to this financial results announcement, Sonic Automotive's forecast revision trend is poor. Although the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status corresponds to a Zacks Rank #4 (Sell) for the stock. Therefore, the stock price is expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the next few quarters and the current fiscal year change going forward. The current consensus EPS estimates are $1.31 on revenue of $3.45 billion for the coming year and $6.83 on revenue of $14.32 billion for the current year.
Investors should be mindful of the fact that industry outlook can also have a significant impact on stock price performance. In terms of Zacks Industry Rank, Automotive – Retail & Wholesale Sales currently ranks in the bottom 8% of the 250+ Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by more than 2-to-1.
Another stock in the broader Zacks Retail-Wholesale sector, Hibbett (Hello BB – Free Report) has not yet reported its results for the quarter ending January 2024.
The sporting goods retailer is expected to post quarterly earnings of $2.54 per share in its next report, which would represent a 12.7% change from the prior year. The current quarter's consensus EPS estimate has remained unchanged over the past 30 days.
Hibbett's sales are expected to increase 3.7% year over year to $475.35 million.
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