SAH Should I Buy
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Sonic Automotive Inc (SAH) is not a strong buy for a beginner investor with a long-term strategy at this moment. While hedge funds are increasing their positions, the company's financial performance has declined, and analysts have lowered price targets, reflecting cautious sentiment. The technical indicators show no strong bullish signals, and the options data suggests limited activity. Given the lack of significant positive catalysts and the cautious outlook on vehicle demand, holding off on buying is recommended for now.
The MACD is positive at 0.325 but contracting, indicating weakening momentum. RSI is neutral at 55.459, and moving averages are converging, showing no clear trend. The stock is trading near the pivot point of 61.215, with resistance at 66.162 and support at 56.268. Overall, the technical indicators do not suggest a strong buy signal.
Hedge funds have increased their buying activity by 117.33% over the last quarter, and the used vehicle market shows good momentum.
Rising tariff costs and potential price increases in the auto industry add further uncertainty.
In Q4 2025, revenue dropped by -0.63% YoY to $3.87 billion, net income fell by -19.97% YoY to $46.9 million, and EPS declined by -17.58% YoY to $1.36. However, gross margin improved by 4.88% YoY to 14.39%.
Analysts have lowered price targets multiple times, with the latest targets ranging from $65 to $69. The consensus rating is 'Equal Weight,' reflecting a neutral stance. Analysts are cautious about vehicle demand in 2026, with some noting soft auto sales and tariff-related pressures.
