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Sonic Automotive, Inc. (SAH)

Company Dividend Discount ModelIndustry: Auto - DealershipsSector: Consumer Cyclical

Valuation Snapshot

Stable Growth$88.47 - $236.17$135.54
Multi-Stage$61.22 - $66.84$63.98
Blended Fair Value$99.76
Current Price$76.09
Upside31.11%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS21.37%22.73%1.171.150.990.530.490.450.280.250.250.15
YoY Growth--2.00%15.94%88.52%6.81%10.59%57.66%11.03%1.72%71.35%-3.48%
Dividend Yield--2.06%2.05%1.83%1.24%0.99%3.36%1.87%1.34%1.25%0.79%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)130.40
(-) Cash Dividends Paid (M)46.00
(=) Cash Retained (M)84.40
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)26.0816.309.78
Cash Retained (M)84.4084.4084.40
(-) Cash Required (M)-26.08-16.30-9.78
(=) Excess Retained (M)58.3268.1074.62
(/) Shares Outstanding (M)34.7534.7534.75
(=) Excess Retained per Share1.681.962.15
LTM Dividend per Share1.321.321.32
(+) Excess Retained per Share1.681.962.15
(=) Adjusted Dividend3.003.283.47
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Fair Value$88.47$135.54$236.17
Upside / Downside16.27%78.13%210.38%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)130.40138.88147.90157.52167.76178.66184.02
Payout Ratio35.28%46.22%57.17%68.11%79.06%90.00%92.50%
Projected Dividends (M)46.0064.1984.55107.29132.62160.79170.22

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)58.2958.8559.40
Year 2 PV (M)69.7371.0672.40
Year 3 PV (M)80.3682.6685.01
Year 4 PV (M)90.2193.6897.24
Year 5 PV (M)99.32104.12109.10
PV of Terminal Value (M)1,729.381,812.911,899.63
Equity Value (M)2,127.292,223.272,322.79
Shares Outstanding (M)34.7534.7534.75
Fair Value$61.22$63.98$66.84
Upside / Downside-19.55%-15.92%-12.15%

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