On September 6, 2023, Heath Byrd, the Executive Vice President and Chief Financial Officer of Sonic Automotive Inc (SAH, Financial), sold 3,800 shares of the company. This move is part of a series of transactions made by Byrd over the past year, during which he has sold a total of 33,307 shares and purchased none.
Sonic Automotive Inc is one of the largest automotive retailers in the United States. The company operates in two segments: Franchised Dealerships and EchoPark. The Franchised Dealerships segment involves the sale of new and used cars and light trucks, and replacement parts; 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. Sonic Automotive operates in 14 states and is based in Charlotte, North Carolina.
The insider transaction history for Sonic Automotive Inc shows a trend of more sells than buys over the past year. There have been six insider sells and zero insider buys in total. This trend is visualized in the following image:
The relationship between insider transactions and the stock price can provide valuable insights. In general, insider selling can be a bearish signal, as it may indicate that insiders believe the stock is overvalued or that they expect the company's earnings to decline. However, it's important to note that insiders may sell shares for a variety of reasons, including personal financial needs or portfolio diversification, and not necessarily because they have a negative outlook on the company.
On the day of the insider's recent sell, shares of Sonic Automotive Inc were trading for $54 apiece, giving the stock a market cap of $1.85 billion. Despite the recent insider selling, the stock appears to be modestly undervalued based on its GuruFocus Value of $66.33, as shown in the following image:
The GuruFocus Value is an intrinsic value estimate that takes into account historical multiples (price-earnings ratio, price-sales ratio, price-book ratio, and price-to-free cash flow) that the stock has traded at, a GuruFocus adjustment factor based on the company's past returns and growth, and future estimates of business performance from Morningstar analysts. With a price-to-GF-Value ratio of 0.81, Sonic Automotive Inc's stock is considered modestly undervalued.
In conclusion, while the recent insider selling by Heath Byrd may raise some eyebrows, the stock's valuation suggests that it may still offer potential upside for investors. As always, investors should conduct their own due diligence and consider multiple factors before making investment decisions.
