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Is Sonic Still Stalled After Mixed Q4?

Is Sonic Still Stalled After Mixed Q4?

Following the release of fiscal year fourth-quarter results by Sonic Corporation (NASDAQ: SONC), Canaccord Genuity maintains its fiscal year 2018 estimates for the company and also the rating on the shares.

As such, the firm reiterated its rating on Sonic at Hold but nudged up its price target from $24 to $25.

At time of writing, shares of Sonic were up 3.71 percent at $25.72.

Analyst Lynne Collier termed Sonic's results as mixed, with comps falling short, while the adjusted earnings per share exceeded estimates. The analyst attributed the earnings upside to a better restaurant-level margin (see Collier's track record here).

While noting that comps fell 3.3 percent compared to the consensus estimate of a 1.5 percent drop, Canaccord Genuity said the shortfall was due to unfavorable weather, a competitive QSR environment and production promotions that were below expectations.

See also: First Impression Of Sonic's Q4

With the management guiding for 5-10 percent earnings growth for fiscal year 2018, the firm maintains its earnings estimate for FY18 at $1.33 per share.

Giving the key takeaways from Sonic's earnings call, the firm said underlying sales trends have improved in the first quarter. The company sees modest commodity cost inflation in 2018, while it increased its targeted leverage ratio to repurchase shares.

Citing the call, the firm also said that advertising changes, as well as menu refinements, are underway.

"While we are encouraged that the company's new value messaging ($2.99 carhop classic) is resonating and underlying SSS have improved thus far in Q1, we look for greater evidence of sustainability before becoming more constructive on shares," the firm added.

Image Credit: By Michael Rivera (Own work) [CC BY-SA 4.0 (], via Wikimedia Commons

Latest Ratings for SONC

Nov 2018DowngradesBuyNeutral
Sep 2018DowngradesOutperformNeutral
Sep 2018MaintainsEqual-WeightEqual-Weight

View More Analyst Ratings for SONC
View the Latest Analyst Ratings

Posted-In: Analyst Color News Price Target Reiteration Restaurants Analyst Ratings Movers General Best of Benzinga


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