logo
  Join        Login             Stock Quote

Sonic (SONC) PT Lifted To $10 By RBC Capital, 'Outperform' Maintained

 March 22, 2012 01:32 PM
 


RBC Capital Markets analyst Larry Miller increased his price target on shares of Sonic Corp. (NASDAQ:SONC) to $10 from $9, while maintaining its "Outperform" rating.

The brokerage raised its 2012 EPS estimate to $0.55 from $0.54, while maintaining its 2013 estimate of $0.63. Miller says Sonic remains a "show me" story with a favorable risk/reward profile.

Sonic showed another quarter of improving sales, with system-wide comps up 3.5% (a 700 basis-point two-year improvement).

While sales benefited from Leap Day (about 1.0%) and unseasonably warm weather, this represents an improvement on both a one and two-year basis from last quarter. Sustainability is the key question given more difficult back-half comparisons, thus SONC remains a "show me" story.

[Related -Futures Rebound As Liquidity Concerns Ease; Barnes & Noble, Inc. (BKS) Plunges]

Sales could remain positive as a result of more effective marketing (re-launch of its successful two-guys media campaign in late February with a focus on driving growth in its five day parts), more media impressions, more new product news, and/or an improving U.S. economy.

Improving sales are a panacea for SONCs business model as earnings would benefit from expanding company margins, rising royalty rates, rising franchise profits, and resumed franchisee unit growth.

Sustainable sales growth would also result in multiple expansion. Additionally, in Miller's view, the downside is limited by the consistent cash flow nature of Sonic's franchised business model coupled with a cheap valuation.

SONC is trading down 5.47at $7.61 on Thursday.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageBaseball, Hot-dogs and Apple Pie Stocks for the July 4th Holiday

Three stocks to own for a piece of Americana – baseball, hot-dogs and apple read on...

article imageTenaris SA (TS): Neutral on Sales, Buy on Earnings

Tenaris SA (TS) shares are outperforming the market today. The extra oomph comes via an upgrade from read on...

article imageContainer Store Group Inc. (TCS) Q1 Earnings Preview: Third Time the Charm?

Container Store Group Inc. (NYSE:TCS) will release its financial results for the first quarter of fiscal read on...

article imageUrban Outfitters, Inc. (URBN): Bottom Fishing or Fishing For a New Bottom

It is time to do some bottom fishing with Urban Outfitters, Inc. (NASDAQ:URBN). Well, it is at least what read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.