Today's stock market
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Utility stocks were the weakest sector, with the Utilities Select SPDR ETF (NYSEMKT:XLU) falling 1.4%. Semiconductor stocks also helped pull the market down after some analyst downgrades; the iShares PHLX Semiconductor ETF (NASDAQ:SOXX) dropped 1.6%.
Sonic is gobbled up by Inspire Brands
Fast-food drive-in chain Sonic is being acquired by privately held Inspire Brands for $43.50 a share in a $2.3 billion cash deal. The stock soared 18.7% to close at $43.46, an all-time high. The buyout price represents a 21% premium to the 30-day average of Sonic's stock price.
Inspire Brands was formed in February 2018 after Arby's Restaurant Group acquired Buffalo Wild Wings in a $2.9 billion acquisition. Inspire has 4,700 Arby's, Buffalo Wild Wings, and Rusty Taco locations worldwide. The agreement has been approved by both boards of directors, and the fact that the stock closed at roughly the offering price indicates that the market believes the transaction will go through without a hitch.
"This value-maximizing transaction validates the actions we have taken over the last year to grow traffic and improve sales while delivering differentiated offerings and superior guest service," said Sonic CEO Cliff Hudson in the press release.
Long-term Sonic shareholders no doubt have mixed feelings about the deal. After the stock had moved sideways for years, things were finally looking up last quarter when shares popped over 16% after the chain said same-store sales strengthened in the period.
The move is the latest in a series of deals taking restaurant chains private, as depressed valuations in the industry have investors with deep pockets salivating. Qdoba, Zoe's Kitchen, and Panera Bread are among the chains that have recently gone private (or will shortly).
FactSet reports growing customer base
FactSet Research Systems, a provider of data and research to financial institutions, reported fiscal fourth-quarter results that slightly missed Wall Street's expectations, and the stock fell 1.9%. Revenue increased 5.9% to $345.9 million, just below the analyst consensus of $346.5 million. Adjusted earnings per share rose 15.8% to $2.20, $0.01 below expectations.
Organic growth of annual subscription value (ASV) was 5.7%, higher than the 5.3% reported last quarter and right in the middle of the range the company had forecast for the year. Adjusted operating margin improved 30 basis points from last quarter to 31.3%. FactSet added 167 clients with ASV over $10,000 in the quarter for a total of 5,142, compared with 80 added last quarter. User count increased by 2,391 to 91,897, well above the 860 increase in Q3.
Looking forward, FactSet guided to revenue of $1.41 billion to $1.45 billion in the upcoming fiscal year and adjusted EPS to grow 12% to a range of $9.45 to $9.65. The midpoints of those ranges were less than analysts were expecting.
The stock fell 6.2% on the initial press release due to the slight miss and disappointing guidance. But it recovered some ground when on the conference call, FactSet executives discussed a major new deal to serve over 15,000 advisors at Bank of America Merrill Lynch and said "we may be being a little bit conservative on our overall guidance" as they wait for some customer decisions on large deals.