Charlotte-based Sonic Automotive Tuesday reported fourth-quarter earnings that were better than expected as low gas prices and an improving job market helped fuel record-high vehicle sales.
For the three months that ended Dec. 31, the auto dealer reported earnings of $31.1 million, up from $26.1 million a year ago, according to a securities filing. On a per-share basis, the company said it had net income of 62 cents. Adjusted for one-time gains and costs, earnings came to 61 cents a share.
The results beat Wall Street expectations. The average estimate of four analysts surveyed by Zacks Investment Research was earnings of 59 cents a share.
The auto dealer posted revenue of $2.47 billion for the quarter, up from $2.35 billion the same period in 2014. Sonic said it sold 35,228 new cars in the quarter, and 28,220 used cars – both record levels, though higher prices of luxury brands have weighed on profit margins of new cars, Sonic said.
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Included in Sonic’s earnings was $3.6 million related to the operations of EchoPark, a standalone used car concept rolled out in Denver in 2014.
Sonic said it plans to open two new EchoPark stores in the Denver market in the first half of this year and has another two planned for the first part of 2017.
“We also have plans in place to add additional stores in at least two different markets beginning in Q4 2016 depending on real-estate closing dates,” Jeff Dyke, Sonic’s executive vice president of operations, said in a statement.
In Charlotte, Sonic’s been rolling out a One Sonic One-Experience sales model, which is intended to eliminate the “pain points” of car-buying, such as price-haggling.
Sonic is a Fortune 500 company with its headquarters in Cotswold.
The company’s shares have fallen 27 percent since the beginning of the year, and have decreased 36 percent in the last 12 months.
Stephens analyst Rick Nelson said the market has reacted to concerns of auto sales peaking. Those concerns are overdone, Nelson said, and Sonic appears to feel that way, too, since the company just bought back about four million of its own shares.
“The auto business is a lot healthier than the stock market is implying,” Nelson said.
The Associated Press contributed.