Ahead of the Bell: Sonic
Analyst raises estimate for Sonic on better-than-expected August sales growth
NEW YORK (AP) -- A William Blair analyst raised her fourth-quarter earnings estimate for Sonic on Friday as the restaurant operator issued strong August sales results and gave a better-than-expected fourth-quarter forecast.
Sonic said that revenue at restaurants open at least a year climbed 5.9 percent in August. This compares with a 2.3 percent rise a year ago. William Blair's Sharon Zackfia said in a client note that the performance topped her forecast for a low single-digit percentage increase and was the strongest quarterly gain in the figure since 2005.
Revenue at restaurants open at least a year is a key indicator of a restaurant operator's performance because it excludes results from restaurants recently opened or closed.
Zackfia said that even though Sonic faced increased food costs related to promotions such as "Summer of Shakes," the company anticipates fourth-quarter operating earnings per share of 30 cents. This is above the analyst's 27 cents per share estimate.
Zackfia lifted her quarterly estimate to 30 cents per share.
The analyst reiterated a "Market Perform" rating.
A representative for Sonic Corp. did not immediately respond to an email seeking comment.
Its shares finished at $17.91 on Thursday after rising to a 52-week high of $18.25 earlier in the day.
