Updated 3/26
Since its founding in 1997, Sonic Automotive has grown into one of the largest automotive retailers in the U.S., with a broad footprint of dealerships offering both new and used vehicles. It’s also the force behind EchoPark, its used car brand that’s been gaining serious traction. Sonic is navigating a space that’s seen massive change over the past decade—from supply chain chaos to the electrification wave—but it continues to carve out a space through operational focus and shareholder returns.
For dividend-focused investors, Sonic isn’t just about cars on lots. It’s about consistent cash flows, growing earnings, and a willingness to return capital.
Recent Events
Sonic closed out 2024 with strong momentum. Revenue for the year reached $14.22 billion, supported by nearly 9% year-over-year quarterly growth. That’s no small feat in an industry still dealing with shifting inventory levels and economic uncertainty. What stood out even more was earnings growth: quarterly net income shot up 51.4% from the previous year.
Operationally, EchoPark remains a big focus. Management has invested heavily in expanding its reach, targeting a younger demographic with a digital-first experience. While margins in used vehicle sales are tighter, the brand has helped diversify Sonic’s revenue stream. Dealership-level execution also improved, driving better gross profit and a noticeable lift in return on equity—now sitting over 22%.
While the macro picture still casts some shadows, Sonic’s recent financial results show that it’s adjusting well.
Key Dividend Metrics
💰 Forward Annual Dividend Rate: $1.40
📈 Forward Annual Dividend Yield: 2.26%
📉 Trailing Dividend Rate: $1.25
💹 Trailing Dividend Yield: 1.99%
📆 5-Year Average Dividend Yield: 1.63%
🧾 Payout Ratio: 20.23%
📅 Dividend Date: April 15, 2025
⏳ Ex-Dividend Date: March 14, 2025
Dividend Overview
Sonic has been quietly turning heads with its dividend performance. At 2.26%, the forward yield offers meaningful income, especially considering the broader market’s relatively low payout levels. Even more impressive? That figure edges out the company’s own five-year average, pointing to positive momentum.
The payout remains well-covered by earnings, and Sonic has shown a clear willingness to keep that stream flowing. The company raised its dividend again in 2024—no fanfare, just steady execution. For investors looking for income without sacrificing growth, that kind of consistency matters.
Dividend Growth and Safety
At just over 20%, Sonic’s payout ratio is extremely conservative. That tells us a lot. First, there’s room to grow the dividend if management chooses. Second, the company has a safety buffer if earnings hit a rough patch.
It’s also worth noting the pace of dividend increases. They’ve been incremental but consistent. Management isn’t stretching to impress with aggressive hikes. Instead, they’re focused on maintaining a manageable, sustainable dividend policy. That’s a sign of discipline.
From a safety standpoint, the combination of healthy earnings, rising free cash flow, and low payout ratios puts Sonic in a strong position to keep delivering to shareholders.
Chart Analysis
Current Market Phase
Looking at Sonic Automotive’s chart, we can break the price action into distinct phases over the past year, aligning closely with a classic Wyckoff market cycle. The earlier part of the chart, around April through July, shows a gradual upward drift with sideways movement—this resembles a late-stage accumulation zone. The stock spent time consolidating above both its 50-day and 200-day moving averages before pushing into a stronger markup phase.
From late September through January, price action moved more decisively upward. That period had cleaner breakouts, higher highs, and solid bullish follow-through—clearly the markup phase. Notably, the 50-day moving average began separating from the 200-day, confirming bullish momentum.
Come February, things began to shift. A series of lower highs and increased volatility entered the picture, especially during the drop off in March. Volume also began to pick up on the red days during that stretch, signaling institutional selling pressure. This recent action, including the breakdown below the 50-day moving average and test of the 200-day, shows a transition into markdown territory. The bounce off the 200-day was expected but doesn’t yet show strong conviction.
Moving Averages Behavior
The 50-day simple moving average has just started to curl downward. That’s never a great short-term sign and often coincides with a weakening trend. The stock is currently below the 50-day but just above the 200-day moving average, which is still sloping upward.
This crossover area—between the 50-day resistance and 200-day support—creates a kind of decision zone. Historically, when a stock loses support from the 50-day and volume builds on the downside, it can signal that momentum is fading. So this bounce needs to gain traction fast, or the risk is the 200-day gives way.
Volume Clues
Volume has been quiet relative to the major spikes we saw during the previous run-ups. Most of the volume bars in March are red, with just a few green candles attempting recovery. That tells us there’s still some distribution going on. We’d want to see a clear pick-up in buying volume—especially on days the price moves higher—to suggest buyers are regaining control.
The absence of high-volume bullish days recently suggests that the buying pressure isn’t convincing yet. A proper reversal usually starts with big green bars that eat up previous selling zones, and we haven’t seen that so far.
RSI and Momentum
The RSI dropped below 30 in mid-March, putting the stock deep into oversold territory. That set the stage for the bounce we’re seeing now. Currently, RSI is ticking back up, hovering around the low 40s. That recovery is a mild positive, but still far from strong bullish territory.
What’s notable is the RSI never reached the highs it did during the markup phase, even when price made new highs earlier in the year. That kind of bearish divergence usually precedes a deeper pullback—so the March decline fits that narrative.
Candle Behavior and Price Action
Focusing on the last five daily candles, the story becomes clearer. The most recent session closed at 63.20, slightly above the open. That gives us a small green candle with a modest wick, indicating slight bullish interest. The candle before it had a longer lower wick and closed higher—a small reversal signal suggesting buyers stepped in intraday.
The three sessions before those showed mixed signals. One red candle had a tall upper wick, which hinted at failed buying attempts and likely short-term resistance. The other two were narrow-bodied candles—indecision days. These often appear at inflection points but need follow-through to confirm direction.
So far, buyers are showing up around the $61–62 area, but they haven’t taken control yet. The lack of strong bullish follow-through, paired with moderate volume, suggests we’re still in a testing phase of this short-term bounce.
Analyst Ratings
📉 Sonic Automotive recently saw a shift in sentiment from one corner of the analyst community. On March 24, 2025, StockNews.com downgraded the stock from a buy to a hold rating. That change signals a more cautious tone, possibly reflecting the recent slowdown in price momentum or concerns around near-term margin compression. With the stock dipping below its 50-day moving average recently, that cautious adjustment fits the broader technical picture.
📈 On the flip side, there have been more bullish takes in recent months. Seaport raised its rating on the stock from neutral to buy back in late November, with a price target of $74. That call was driven by improved earnings visibility and operational efficiency, especially as Sonic continues to expand its EchoPark segment. Analysts cited stronger unit economics and better-than-expected performance in used vehicle retail.
📊 Around the same time, BofA Securities lifted its price target from $66 to $72 while reaffirming a buy rating. Their team pointed to Sonic’s lean cost structure and expanding margins. They also highlighted Sonic’s ability to generate consistent earnings despite macroeconomic pressures, noting the company’s strong return on equity and disciplined capital allocation.
💡 The average analyst price target now sits at $77.80. That’s a decent premium over the current share price, suggesting a moderate upside in the eyes of the broader analyst community. The general tone from recent updates leans constructive, but with a note of caution as the stock consolidates after its strong run in late 2024.
Overall, sentiment has been mixed but slightly tilted toward the positive side, with some recent hesitation tied to valuation and technical resistance near the mid-$60s.
Earning Report Summary
A Strong Finish to the Year
Sonic Automotive wrapped up 2024 with a solid fourth-quarter performance, showing that it’s still very much in the game. Total revenue hit $3.9 billion, which was a company record for any quarter. That’s a 9% bump compared to the same period the year before, and it shows that demand is holding up despite some industry headwinds.
Profit-wise, the numbers were a little more mixed. Net income came in at $58.6 million. On an adjusted basis, net income was $53.1 million, or $1.51 per share. That’s slightly down—about 7% off from where things stood in Q4 of 2023—but it’s still a solid showing, especially when you factor in rising costs and interest rates that have been pressuring the auto retail space.
Franchise Dealerships Still Driving the Business
The franchised dealership segment really pulled its weight this quarter. Revenue from that side of the business came in at $3.4 billion, which is up 12% year-over-year. New vehicle sales were especially strong, rising 13%, while used vehicle sales also pushed higher by 5%.
What’s interesting is that it wasn’t just about selling more cars. Service and parts—often a more stable income stream—also delivered. Gross profit from fixed operations climbed 12%, and the finance and insurance segment posted a 14% gain in gross profit. These steady contributors helped balance out some of the pricing pressure seen elsewhere.
EchoPark Makes Progress, Despite Challenges
EchoPark, Sonic’s used car division, had a decent quarter as well. Revenue landed at just over $500 million. Gross profit per vehicle was a little soft, but on a same-store basis, profits were up 29%. That’s a good sign that the strategy is working, even if the market for used cars isn’t as hot as it was during the pandemic years.
Strategic Moves Set the Stage for 2025
Sonic also made a few noteworthy acquisitions this past quarter. They picked up stakes in North Point Volvo, Audi New Orleans, and a couple of motorcycle dealerships in Charlotte and Greensboro. Combined, those deals are expected to add about $145 million in revenue annually. At the same time, they met their hiring goal for techs, bringing in over 300 new technicians—setting the stage for stronger service operations in the coming year.
In short, Q4 wasn’t just about wrapping up a record year—it was about laying the groundwork for continued growth in 2025.
Financial Health and Stability
Let’s be honest—Sonic carries a lot of debt. The total debt figure stands at $4.13 billion, and the debt-to-equity ratio is north of 388%. That’s a big number. But context matters.
Most of this debt is tied to vehicle inventory financing, which is standard in the dealership business. It’s short-term and secured, not speculative. And while that leverage is eye-catching, the company also has $384 million in cash and continues to generate positive operating cash flow—$109 million over the trailing twelve months.
On the flip side, free cash flow was negative this year. That’s worth watching, especially if Sonic continues to pour capital into growth projects like EchoPark. Still, the overall liquidity picture isn’t alarming. The current ratio is a hair above 1.0, suggesting it can cover short-term obligations.
Is the balance sheet perfect? No. But for a capital-intensive business, Sonic is managing its financial position with care.
Valuation and Stock Performance
Sonic’s shares recently traded just under $62. The stock is up around 8.6% over the past 12 months—nearly matching the S&P 500. But the valuation suggests there’s still room to run, at least on a relative basis.
The forward P/E ratio is 10.21. That’s low for a company with over 50% earnings growth in its latest quarter. The PEG ratio sits at just 0.80, reinforcing that earnings are growing faster than the price is rising.
From a broader perspective, the market isn’t pricing in much optimism. Price-to-sales sits at just 0.15, and even price-to-book remains under 2.0. For value-conscious dividend investors, those are appealing entry points.
It’s also a volatile stock, with a beta of 1.72—so price swings can be sharper than the market. But that risk is partially offset by solid fundamentals and shareholder-friendly policies.
Risks and Considerations
There’s plenty to like here, but Sonic isn’t without risk.
The automotive sector is inherently cyclical. It’s tied closely to consumer spending, credit availability, and macroeconomic shifts. A downturn in any of those could slow sales and pressure margins.
The used car market, particularly EchoPark, brings its own volatility. Supply, pricing, and consumer preferences can change fast. That puts pressure on management to stay agile—and on the investor to keep tabs on execution.
Then there’s debt. While common in this industry, it’s high enough that rising interest rates or a liquidity crunch could tighten the screws. Sonic needs to maintain steady operating cash flow to keep things smooth.
Also worth watching: the short interest. About 11% of the float is sold short. That’s not a dealbreaker, but it shows that a meaningful number of investors are betting against the stock.
Final Thoughts
Sonic Automotive doesn’t always make the top of the dividend stock lists—but maybe it should. It offers an above-average yield, conservative payout practices, and strong earnings momentum. Pair that with attractive valuation metrics, and you’ve got a stock that deserves a closer look.
This is a company that’s still investing in its future while rewarding shareholders today. The balance isn’t perfect—especially with the debt load—but there’s a lot to appreciate. For dividend investors seeking income, growth potential, and value in one package, Sonic is worth keeping on the radar. It might not be flashy, but it knows how to drive results.