DICK’S Sporting Goods (NYSE:DKS) vs. Sonic Automotive (NYSE:SAH) Financial Survey

Sonic Automotive (NYSE:SAH) and DICK’S Sporting Goods (NYSE:DKS) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, earnings, dividends, analyst recommendations, institutional ownership and profitability.

Insider & Institutional Ownership

46.9% of Sonic Automotive shares are owned by institutional investors. Comparatively, 89.8% of DICK’S Sporting Goods shares are owned by institutional investors. 43.7% of Sonic Automotive shares are owned by company insiders. Comparatively, 28.9% of DICK’S Sporting Goods shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk & Volatility

Sonic Automotive has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500. Comparatively, DICK’S Sporting Goods has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for Sonic Automotive and DICK’S Sporting Goods, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sonic Automotive	2	3	6	0	2.36
DICK’S Sporting Goods	2	8	12	0	2.45

Sonic Automotive currently has a consensus price target of $97.33, indicating a potential upside of 22.51%. DICK’S Sporting Goods has a consensus price target of $170.22, indicating a potential upside of 21.54%. Given Sonic Automotive’s higher possible upside, equities research analysts plainly believe Sonic Automotive is more favorable than DICK’S Sporting Goods.

Profitability

This table compares Sonic Automotive and DICK’S Sporting Goods’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sonic Automotive	1.37%	20.75%	3.51%
DICK’S Sporting Goods	3.97%	19.21%	6.07%

Valuation and Earnings

This table compares Sonic Automotive and DICK’S Sporting Goods”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sonic Automotive	$15.15 billion	0.17	$118.70 million	$6.27	12.67
DICK’S Sporting Goods	$17.22 billion	0.73	$849.24 million	$9.31	15.04

DICK’S Sporting Goods has higher revenue and earnings than Sonic Automotive. Sonic Automotive is trading at a lower price-to-earnings ratio than DICK’S Sporting Goods, indicating that it is currently the more affordable of the two stocks.

Dividends

Sonic Automotive pays an annual dividend of $1.64 per share and has a dividend yield of 2.1%. DICK’S Sporting Goods pays an annual dividend of $5.00 per share and has a dividend yield of 3.6%. Sonic Automotive pays out 26.2% of its earnings in the form of a dividend. DICK’S Sporting Goods pays out 53.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Sonic Automotive has increased its dividend for 4 consecutive years and DICK’S Sporting Goods has increased its dividend for 11 consecutive years. DICK’S Sporting Goods is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

DICK’S Sporting Goods beats Sonic Automotive on 13 of the 17 factors compared between the two stocks.

About Sonic Automotive

Sonic Automotive, Inc. operates as an automotive retailer in the United States. It operates in three segments, Franchised Dealerships, EchoPark, and Powersports. 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 for its guests. The EchoPark segment sells used cars and light trucks; and arranges finance and insurance product sales for its guests in pre-owned vehicle specialty retail locations. The Powersports Segment sells new and used powersports vehicles, such as motorcycles, and personal watercraft and all-terrain vehicles; and offers finance and insurance services. The company was incorporated in 1997 and is based in Charlotte, North Carolina.

About DICK’S Sporting Goods

DICK’s Sporting Goods, Inc. engages in the retailing of an extensive assortment of authentic sports equipment, apparel, footwear, and accessories. It also offers its products both online and through mobile applications. The company was founded by Richard T. Stack in 1948 and is headquartered in Coraopolis, PA.