Why Is Sonic Automotive (SAH) Down 14.1% After Record Revenues and an Earnings Miss?

• Sonic Automotive, Inc. reported record third-quarter 2025 results with all-time high quarterly consolidated revenues of US$3.97 billion and gross profit, surpassing market expectations for revenue but missing on earnings.
• The company also announced the completion of its acquisition of Jaguar Land Rover Santa Monica, solidifying its position in the U.S. luxury auto market, and approved a quarterly cash dividend of US$0.38 per share payable in January 2026.
• Next, we'll examine how Sonic Automotive's record revenue and ongoing acquisition activity influence its investment narrative and future prospects.

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Sonic Automotive Investment Narrative Recap

For Sonic Automotive, believing in the investment means having confidence in the company's ability to leverage physical dealership scale and luxury acquisitions to drive revenue, despite ongoing headwinds to margins and profitability. The recent record revenue is encouraging for short-term sentiment, but margin pressures and an earnings miss keep attention on whether Sonic can defend its high-margin fixed operations and weather ongoing shifts to digital and direct-to-consumer models, these challenges remain the most pressing short-term catalyst and risk. The current news does not materially shift this balance.

Among recent developments, the completion of the Jaguar Land Rover Santa Monica acquisition stands out. This move not only cements Sonic as a key player in the U.S. luxury auto space but also aligns with the catalyst of growing portfolio exposure to high-margin dealerships in prime, high-demand markets. This acquisition is projected to add meaningful annual revenues, supporting management’s focus on portfolio optimization as a lever for future growth.

Yet, on the other hand, investors wondering how the rise of direct-to-consumer sales and digital competitors could further pressure Sonic's margins should consider...

Read the full narrative on Sonic Automotive (it's free!)

Sonic Automotive's narrative projects $17.5 billion in revenue and $310.7 million in earnings by 2028. This requires 6.0% annual revenue growth and a $152.9 million increase in earnings from $157.8 million today.

Uncover how Sonic Automotive's forecasts yield a $82.33 fair value, a 28% upside to its current price.

Exploring Other Perspectives

Four members of the Simply Wall St Community assessed Sonic’s fair value between US$38.43 and US$99.73 per share. With dealership expansion and luxury market acquisitions in focus, investor opinions span a wide spectrum, see how your view compares.

Explore 4 other fair value estimates on Sonic Automotive - why the stock might be worth 40% less than the current price!

Build Your Own Sonic Automotive Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Sonic Automotive research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Sonic Automotive research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Sonic Automotive's overall financial health at a glance.

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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.

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