Sonic Shares Soared: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Sonic (Nasdaq: SONC  ) surged as much as 14% in intraday trading today after the company issued a press release foreshadowing surprisingly strong revenue trends.

So what: Management said same-store sales -- sales from stores open at least a year -- for the fiscal third quarter, ending next month, are now forecast to come in between 4% and 6%. Comps improved just 1.2% in fiscal Q2.

Now what: Even so, this classic burger builder is on a roll. (Yep, pun intended.) Sonic easily beat estimates in its fiscal first quarter -- and that's when comps were still declining.

Should investors take a bite of the stock? I don't see why not. Sonic trades for a small premium to the five-year earnings growth analysts estimate, resulting in a perfectly reasonable 1.23 PEG ratio. By contrast, McDonald's (NYSE: MCD  ) sports a 1.47 PEG at current prices.

Interested in more info on Sonic? Add it to your watchlist.

Interested in more info on McDonald's? Add it to your watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. McDonald's is a Motley Fool Income Investor recommendation. You can try any of our Foolish newsletter services free for 30 days.

Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is at least 10% better than other disclosure policies.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1485507, ~/Articles/ArticleHandler.aspx, 12/20/2014 3:52:13 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement