Super Sonic

A friend of mine introduced me to Sonic (Nasdaq: SONC) in the fall. I've been getting cravings ever since, and apparently I am not the only one.

After the bell yesterday, Sonic reported second-quarter earnings, and the results are impressive. The drive-in restaurant operator said that revenues climbed 19% to $132.6 million in the quarter. As a result, net income rose an even better 27% to $28.6 million, or $0.20 per share, meeting the analyst estimate.

The key was Sonic's same-store sales growth of 7%, ahead of the company's modest long-term target for growth of 2% to 4%. Positive same-store sales growth numbers, particularly those higher than the company's long-term growth targets, portend quite favorably for medium to longer-term prospects. In retail environments, same-store growth is a widely tracked metric -- it measures the sales growth in those locations open for more than one year, thereby providing some insight into just how effectively the company itself has allocated capital. After all, is revenue growth at the expense of relatively lower (or non-existent) profit margins preferential to the sort of growth that also bolsters profit margins? For those wondering, think Krispy Kreme (NYSE: KKD) right now and McDonald's (NYSE: MCD) not too long ago.

In the press release, CEO Clifford Hudson attributed the strong performance to a number of related factors, including the completed installation of credit-card payment terminals at the drive-in stalls at partner restaurants, the emphasis on cable advertising, and new products.

Given the strong same-store sales in the first half, Sonic said that it now expects same-store sales to come in at 4% to 6% in the second half of the fiscal year. In addition, the company forecast net income growth of 18% to 20% for the third quarter, translating into earnings of $0.36 per share -- on par with the current analyst estimate.

Given the relatively high degree of industry competition, it's somewhat questionable as to whether Sonic will continue such healthy and profitable expansion. There's also the likes of industry stalwarts McDonald's or Wendy's International (NYSE: WEN) to contend with. But overall, Sonic turned in a rock solid second quarter.

For related Fool Takes, see:

• Sonic's Retro Boom
• Sonic's Boom

Fool contributor Jeff Hwang owns none of the companies mentioned above.