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Sonic Automotive, Inc. (SAH)

Company Dividend Discount ModelIndustry: Auto - DealershipsSector: Consumer Cyclical

Valuation Snapshot

Stable Growth$88.02 - $233.51$134.60
Multi-Stage$61.02 - $66.63$63.78
Blended Fair Value$99.19
Current Price$76.09
Upside30.36%
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 Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Fair Value$88.02$134.60$233.51
Upside / Downside15.68%76.89%206.88%

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 Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)58.2858.8459.39
Year 2 PV (M)69.7171.0472.38
Year 3 PV (M)80.3282.6284.97
Year 4 PV (M)90.1593.6197.18
Year 5 PV (M)99.24104.04109.01
PV of Terminal Value (M)1,722.851,806.061,892.46
Equity Value (M)2,120.552,216.212,315.39
Shares Outstanding (M)34.7534.7534.75
Fair Value$61.02$63.78$66.63
Upside / Downside-19.80%-16.18%-12.43%

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