Don’t Be Fooled by Sonic Automotive Inc (SAH)’s Delayed SEC Filing

AutoNation – the largest US dealer network – is a diversified player, but has a strong presence in the luxury vehicle market. Nearly 29% of its revenues were due to luxury vehicle sales in 2012. As AutoNation CEO Mike Jackson said while presenting latest results, the retail recovery is still in ‘early innings,’ auto sales can be expected to go up further. This is made possible by improved financing, new products, and genuine replacement need and is more true for premium brands than the mass-market ones. AutoNation has been very aggressive with its expansion and branding plans and has even approached car companies to carve out a separate brand for its stores. The company acquired six more stores towards the end of last year, which still does not reflect in its valuations. These actions, aimed at boosting profits, are expected to come at forefront when the company reports its first quarter results.

Overall, the car retailers have enjoyed a dream run on the bourses in recent months, but there appears to be more steam left in the rally. The three players have all gained in double digits over the last quarter. While this has kept the valuations in line with the larger market, these stocks do not appear to be over-valued on key metrics. In fact, the upbeat sales outlook of a 7% improvement in industry sales during the current year, shared by all the players, does not reflect in valuations and this will be considered in future pricing.

The article Don’t Be Fooled by Sonic Automotive’s Delayed SEC Filing originally appeared on Fool.com and is written by Jacob Wolinsky.

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