Sonic Corporation Q1 Earnings: Beating Expectations

Small cap burger stock Sonic Corporation (NASDAQ: SONC) reported fiscal Q1 2018 earnings after the market closed Thursday that exceeded Wall Street expectations. Total revenues were $105.428 million versus $129.551 million assystem same-store sales declined 1.7% – consisting of a 1.6% same-store sales decrease at franchise drive-ins and a 3.2% decrease at company drive-in. Net income totaled $11.4 million versus net income of $13.1 million. The CEO commented:

“As expected, our first quarter same-store sales declined modestly versus prior year reflecting continued intense competitive pressure and unfavorable weather. Excluding the impact of weather, same-store sales were flat, indicating an improvement in underlying traffic trends.

“During the quarter, we promoted the Carhop Classic for $2.99, featuring our full-sized cheeseburger and medium hand-made onion rings, a value offering with a highly compelling price point, broad consumer appeal and strong quality differentiation. In addition to driving improved traffic, the introduction of a sharper everyday value message also improved value and quality scores from customers, validating our evolution to more focused and consistent national value promotions. We will continue to refine this strategy as we move through the remainder of the fiscal year, seeking to balance everyday value and consistent profitability for franchisees while staying true to Sonic’s core tenets of quality, differentiation and innovation.

“While price competition remains fierce, we are hard at work driving the business in areas we can control. We continue to refine our current media strategies, resulting in increased impressions on national cable today and new creative content in the market this spring. We have growing confidence in our product pipeline as we look out to the key summer season and our mobile order ahead pilot is underway.

“Finally, we continue to optimize our capital structure and return cash to shareholders. During the quarter, we repurchased 1.7 million shares, or 4% of shares outstanding, for $40.8 million. We have increased our targeted leverage range to 3.5-4.5x net-debt-to-EBITDA and anticipate concluding the year at the higher end of the range.”

A technical chart for Sonic Corporation shows shares peaking in December just below summer highs with shares now falling off:

A long term performance chart shows Sonic Corporation outperforming small cap burger stock peers Red Robin Gourmet Burgers, Inc (NASDAQ: RRGB),Habit Restaurants Inc (NASDAQ: HABT) andShake Shack Inc (NYSE: SHAK)but also below previous all time highs:

Finally, here is a quick recap of Sonic Corporations earnings history along with EPS estimate trends from the Yahoo! Finance analyst estimates page going into the current earnings report:

Earnings History2/27/20175/30/20178/30/201711/29/2017
EPS Est. 0.14 0.41 0.43 0.25
EPS Actual 0.15 0.43 0.45 0.3
Difference 0.01 0.02 0.02 0.05
Surprise % 7.10% 4.90% 4.70% 20.00%
EPS TrendCurrent Qtr. (Feb 2018)Next Qtr. (May 2018)Current Year (2018)Next Year (2019)
Current Estimate 0.15 0.46 1.35 1.54
7 Days Ago 0.15 0.46 1.34 1.52
30 Days Ago 0.15 0.46 1.35 1.52
60 Days Ago 0.15 0.46 1.35 1.52
90 Days Ago 0.17 0.47 1.37 1.57

Leave a Reply

Your email address will not be published. Required fields are marked *