Sometimes retro is a good thing. And I admit, I do enjoy a taste of nostalgia as much as the next guy.
But I'm starting to think Sonic
The company kept the streak going for the second quarter with comp sales higher by 3.2%, just like clockwork. A 5% increase in store count resulted in total sales improving by 8%. Operating margins at 15.3% of sales improved 50 basis points from the prior year, primarily on leverage from sales increases. Reported EPS of $0.15 was exactly what Wall Street expected, up 15% after adjusting for the prior year's unusual costs to retire debt.
At Sonic the focus is all on building the brand with innovative TV advertising, carefully controlled growth into new markets, and product innovation. Management has joined the coffee wars between McDonald's
For the balance of the year Sonic is forecasting more of the same. Same-store sales are expected to fall between 2% and 4%. Despite a federal minimum wage increase effective in July, management expects bottom-line growth to be in the mid-teens -- helped by continuing share repurchases. New store growth will be 180-200 units, with an acceleration of spending to retrofit existing drive-ins to the newest look.
Sonic doesn't get a lot of play from analysts or the media. Fellow Fool Rick Munarriz aptly calls the company a forgotten retail stock. Perhaps it's just a different animal, compared to traditional fast-food operators such as Burger King
But CAPS All-Star players overwhelmingly rate the stock to outperform, making it a four-star (out of five) stock. It might be worth your while to try this time-warp issue on for size.
Fool contributor Timothy M. Otte surveys the retail scene from Dallas. He welcomes comments on his articles, and owns shares of Starbucks, but none of the other companies mentioned in this article. The Fool has a disclosure policy.