Sonic Shares Soared: What You Need to Know

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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.

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Related Tickers

10/25/2016 10:12 AM
SONC $21.71 Down -4.78 -18.04%
Sonic CAPS Rating: **
MCD $113.29 Down -0.28 -0.25%
McDonald's CAPS Rating: ***