Contrasting IAA (NYSE:IAA) & Sonic Automotive (NYSE:SAH)

IAA (NYSE:IAA) and Sonic Automotive (NYSE:SAH) are both auto/tires/trucks companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, risk, dividends, profitability, institutional ownership and valuation.

Insider & Institutional Ownership

60.8% of Sonic Automotive shares are owned by institutional investors. 31.6% of Sonic Automotive shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares IAA and Sonic Automotive’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
IAA N/A N/A N/A N/A N/A
Sonic Automotive $9.95 billion 0.10 $51.65 million $1.77 13.41

Sonic Automotive has higher revenue and earnings than IAA.

Profitability

This table compares IAA and Sonic Automotive’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
IAA N/A N/A N/A
Sonic Automotive 0.97% 10.12% 2.15%

Analyst Ratings

This is a summary of recent ratings and recommmendations for IAA and Sonic Automotive, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
IAA 0 2 5 0 2.71
Sonic Automotive 2 1 2 0 2.00

IAA currently has a consensus price target of $45.75, suggesting a potential upside of 1.22%. Sonic Automotive has a consensus price target of $21.00, suggesting a potential downside of 11.50%. Given IAA’s stronger consensus rating and higher possible upside, analysts plainly believe IAA is more favorable than Sonic Automotive.

Dividends

Sonic Automotive pays an annual dividend of $0.40 per share and has a dividend yield of 1.7%. IAA does not pay a dividend. Sonic Automotive pays out 22.6% of its earnings in the form of a dividend. Sonic Automotive has increased its dividend for 3 consecutive years.

Summary

Sonic Automotive beats IAA on 8 of the 12 factors compared between the two stocks.

About IAA

IAA, Inc. provides salvage vehicle auctions and related services. It offers salvage auction services, such as inbound transportation logistics, inspection, evaluation, salvage recovery, titling, and settlement administrative services. The company's salvage auctions facilitate the remarketing of damaged vehicles designated as total losses by insurance companies, charity donation vehicles, recovered stolen (or theft) vehicles, and low value used vehicles through live and online auctions. As of December 31, 2018, it operated 179 salvage vehicle auction sites in the United States and Canada; and 14 locations in the United Kingdom. Insurance Auto Auctions, Inc. serves insurance companies, used vehicle dealers, rental car and fleet leasing companies, auto lenders, non-profit organizations, and the general public. The company was founded in 1982 and is headquartered in Westchester, Illinois. IAA, Inc.(NYSE:IAA) operates independently of KAR Auction Services, Inc. as of June 28, 2019.

About Sonic Automotive

Sonic Automotive, Inc. operates as an automotive retailer in the United States. It operates in two segments, Franchised Dealerships and EchoPark. The Franchised Dealerships segment is involved in the sale of new and used cars and light trucks, and replacement parts; provision of vehicle maintenance, manufacturer warranty repair, and paint and collision repair services; and arrangement of extended warranties, service contracts, financing, insurance, and other aftermarket products. The EchoPark segment sells used cars and light trucks; and arranges finance and insurance product sales in pre-owned vehicle specialty retail locations. As of December 31, 2018, the company operated 108 new vehicle franchises representing 25 brands of cars and light trucks 18 collision repair centers in 13 states; and 8 EchoPark stores. Sonic Automotive, Inc. was founded in 1997 and is based in Charlotte, North Carolina.

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