Sonic shares slide despite strong earnings

Oklahoma Citybased Sonic Corp. beat analysts’ expectations on third-quarter earnings, but fell short on revenue.

After Tuesday afternoon’s earnings announcement, shares of the drive-in restaurant chain slipped $1.61, or 4.5 percent, to close Wednesday at $34.02. However, Sonic shares remain up 25 percent so far this year.

Sonic’s adjusted earnings of 52 cents per share outpaced an average estimate of 49 cents, and was up more than 20 percent from the same period a year earlier, with much of the boost coming from the lower corporate income tax.

Third-quarter profits totaled $21.6 million, up from $18.8 million in the year-ago quarter.

Sonic posted revenue of $118.3 million in the period, narrowly missing analysts’ forecast of $119.7 million.

System same-store sales declined 0.2 percent, but CEO Cliff Hudson attributed much of that decline to stubborn winter weather and noted that May was a strong month for sales, a trend that has continued in June.

“Our third-quarter same-store sales performance reflects a material improvement in trend, driven by ongoing initiatives to increase marketing reach, refresh our advertising and introduce relevant new products, including the Sonic Signature Slinger and Pretzel Twist,” Hudson said in a statement.

During the quarter, Sonic repurchased 1.5 million outstanding shares.

The company has bought back4.3 million of its shares in the first nine months of fiscal 2018, or 9.8 percent of its outstanding shares.

The company also opened five new stores in the third quarter.

Sonic revised its fullyear guidance for earnings per share to be between $1.45 and $1.49, narrowed from a previous forecast of between $1.43 and $1.50.