David Bruton Smith Takes Money Off The Table, Sells $3.96M In Sonic Automotive Stock

A substantial insider sell was reported on May 9, by David Bruton Smith, Chairman and CEO at Sonic Automotive SAH, based on the recent SEC filing.

What Happened: After conducting a thorough analysis, Smith sold 67,724 shares of Sonic Automotive. This information was disclosed in a Form 4 filing with the U.S. Securities and Exchange Commission on Thursday. The total transaction value is $3,957,426.

In the Friday's morning session, Sonic Automotive's shares are currently trading at $58.5, experiencing a down of 0.0%.

About Sonic Automotive

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 Growth: Sonic Automotive's revenue growth over a period of 3 months has faced challenges. As of 31 March, 2024, the company experienced a revenue decline of approximately -3.07%. This indicates a decrease in the company's top-line earnings. As compared to competitors, the company encountered difficulties, with a growth rate lower than the average among peers in the Consumer Discretionary sector.

Exploring Profitability:

• 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): With an EPS below industry norms, Sonic Automotive exhibits below-average bottom-line performance with a current EPS of 1.24.

Debt Management: Sonic Automotive's debt-to-equity ratio is below the industry average at 4.29, reflecting a lower dependency on debt financing and a more conservative financial approach.

Analyzing Market Valuation:

• Price to Earnings (P/E) Ratio: The current P/E ratio of 11.99 is below industry norms, indicating potential undervaluation and presenting an investment 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): With a lower-than-industry-average EV/EBITDA ratio of 10.43, Sonic Automotive presents a potential value opportunity, as investors are paying less for each unit of EBITDA.

Market Capitalization Analysis: Below industry benchmarks, the company's market capitalization reflects a smaller scale relative to peers. This could be attributed to factors such as growth expectations or operational capacity.

Now trade stocks online commission free with Charles Schwab, a trusted and complete investment firm.

Why Insider Transactions Are Important

Insider transactions should be considered alongside other factors when making investment decisions, as they can offer important insights.

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.

Exploring Key Transaction Codes

When dissecting transactions, the focal point for investors is often those occurring in the open market, meticulously detailed in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C indicates the conversion of an option, and transaction code A denotes 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.