SAH
Sonic Automotive, Inc.
$100.42
Platform & Compounding FCF
50%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 15.6% above fair value
You pay
$100.42
Bear
$45.04
Fair
$86.87
Bull
$125.25
Bear
$45.04
-55.2%
4% stage 1 growth, 11% discount
Fair
$86.87
-13.5%
7% stage 1 growth, 11% discount
Bull
$125.25
+24.7%
10% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (7% base case)
Terminal Value % of EV
37%
Implied Market Multiple
19.1x
Market is pricing in (growth)
8.3%
vs 7.4% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $90.50 from 16 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $86.87 per share.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions