S&P: Sonic outlook positive

Standard & Poor's said it revised the outlook on Sonic Automotive Inc. to positive from stable and affirmed its B+ corporate credit rating.

"The outlook revision indicates we believe there is a one-in-three chance we could raise the rating on Sonic in the year ahead because we believe the company has demonstrated its ability and willingness to improve its credit measures in the near term," S&P analyst Nancy Messer said in a statement.

Lease adjusted leverage for the 12 months ended April 30 fell to about 5.5x as adjusted for the company's recent refinancing, Messer added.

Ratings reflect the company's business risk profile as fair and its financial risk profile as aggressive, characterized by high leverage, the agency said.

The company's ability to generate free cash from operations on a fairly consistent basis, in conjunction with minimizing capital investment in dealerships and refraining from making large acquisitions, mitigates its high leverage that resulted from lower earnings during the recession, the agency noted.

Ratings reflect the resilience of Sonic's business model, with its diverse revenue stream, S&P said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.