Zacks Investment Research Lowers Sonic Corp. (SONC) to Sell

Zacks Investment Research downgraded shares of Sonic Corp. (NASDAQ:SONC) from a hold rating to a sell rating in a research report sent to investors on Thursday, October 19th.

According to Zacks, “Sonic Corp. operates and franchises one of the largest chain of drive-in restaurants in the United States. Sonic restaurants offer made-to-order hamburgers and other sandwiches and feature Sonic signature items, such as footlong coney cheese dogs, hand-battered onion rings, tater tots, specialty soft drinks, including cherry limeades and slushes, and frozen desserts. At a typical Sonic restaurant, a customer drives into one of 24 to 36 covered drive-in spaces, orders through an intercom, and has the food delivered by a carhop within an average of four minutes. “

A number of other research analysts also recently weighed in on the stock. Oppenheimer Holdings, Inc. reissued a buy rating and set a $29.00 target price on shares of Sonic Corp. in a research report on Tuesday, October 17th. Canaccord Genuity upped their price target on shares of Sonic Corp. from $24.00 to $25.00 and gave the company a hold rating in a research note on Tuesday, October 17th. Cowen and Company restated a neutral rating on shares of Sonic Corp. in a research note on Tuesday, October 17th. Citigroup Inc. initiated coverage on shares of Sonic Corp. in a research note on Monday, September 18th. They set a buy rating and a $28.00 price target on the stock. Finally, Bank of America Corporation restated a buy rating and set a $30.00 price target on shares of Sonic Corp. in a research note on Monday, August 14th. Three research analysts have rated the stock with a sell rating, eight have issued a hold rating and five have assigned a buy rating to the stock. The stock has an average rating of Hold and a consensus target price of $27.73.

Sonic Corp. (NASDAQ:SONC) opened at 25.77 on Thursday. The company’s 50-day moving average price is $24.53 and its 200-day moving average price is $25.85. The firm has a market cap of $1.06 billion, a price-to-earnings ratio of 17.77 and a beta of 1.76. Sonic Corp. has a 52-week low of $22.11 and a 52-week high of $30.05.

Sonic Corp. (NASDAQ:SONC) last released its earnings results on Monday, October 16th. The restaurant operator reported $0.45 earnings per share for the quarter, beating the Zacks’ consensus estimate of $0.43 by $0.02. Sonic Corp. had a net margin of 13.34% and a negative return on equity of 33.92%. The firm had revenue of $123.60 million during the quarter, compared to the consensus estimate of $126.01 million. During the same period in the prior year, the firm earned $0.45 EPS. The company’s revenue was down 23.8% compared to the same quarter last year. Analysts predict that Sonic Corp. will post $1.35 EPS for the current year.

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The business also recently disclosed a quarterly dividend, which will be paid on Friday, November 17th. Stockholders of record on Wednesday, November 8th will be given a dividend of $0.16 per share. The ex-dividend date is Tuesday, November 7th. This represents a $0.64 annualized dividend and a dividend yield of 2.48%. This is a boost from Sonic Corp.’s previous quarterly dividend of $0.14. Sonic Corp.’s dividend payout ratio (DPR) is 38.10%.

Sonic Corp. announced that its board has authorized a stock buyback plan on Wednesday, August 9th that authorizes the company to buyback $160.00 million in outstanding shares. This buyback authorization authorizes the restaurant operator to buy up to 16.2% of its stock through open market purchases. Stock buyback plans are generally an indication that the company’s board believes its stock is undervalued.

In related news, Director Frank E. Richardson III sold 50,000 shares of the stock in a transaction on Thursday, October 26th. The shares were sold at an average price of $25.59, for a total transaction of $1,279,500.00. Following the transaction, the director now owns 1,187,659 shares of the company’s stock, valued at approximately $30,392,193.81. The transaction was disclosed in a legal filing with the SEC, which is available through the SEC website. Also, Director Federico F. Pena sold 1,161 shares of the stock in a transaction on Monday, October 23rd. The shares were sold at an average price of $25.20, for a total transaction of $29,257.20. Following the transaction, the director now directly owns 1,187,659 shares in the company, valued at approximately $29,929,006.80. The disclosure for this sale can be found here. Company insiders own 6.24% of the company’s stock.

Several hedge funds have recently added to or reduced their stakes in SONC. Aperio Group LLC grew its holdings in Sonic Corp. by 1.4% in the 2nd quarter. Aperio Group LLC now owns 8,348 shares of the restaurant operator’s stock worth $221,000 after acquiring an additional 119 shares during the last quarter. Mason Street Advisors LLC grew its holdings in Sonic Corp. by 2.8% in the 1st quarter. Mason Street Advisors LLC now owns 10,274 shares of the restaurant operator’s stock worth $261,000 after acquiring an additional 275 shares during the last quarter. Victory Capital Management Inc. grew its holdings in Sonic Corp. by 8.1% in the 2nd quarter. Victory Capital Management Inc. now owns 18,464 shares of the restaurant operator’s stock worth $489,000 after acquiring an additional 1,380 shares during the last quarter. Cobiz Wealth LLC grew its holdings in Sonic Corp. by 2.6% in the 2nd quarter. Cobiz Wealth LLC now owns 57,230 shares of the restaurant operator’s stock worth $1,516,000 after acquiring an additional 1,447 shares during the last quarter. Finally, Denver Investment Advisors LLC grew its holdings in Sonic Corp. by 8.9% in the 2nd quarter. Denver Investment Advisors LLC now owns 17,880 shares of the restaurant operator’s stock worth $474,000 after acquiring an additional 1,465 shares during the last quarter.

Sonic Corp. Company Profile

Sonic Corp. operates and franchises the chain of drive-thru restaurants (Sonic Drive-Ins) in the United States. As of August 31, 2016, 3,557 Sonic Drive-Ins were in operation from coast to coast in 45 states, consisting of 345 Company drive-thrus and 3,212 franchise drive-thrus. As of August 31, 2016, its restaurant design and construction consisted of a kitchen housed in a one-story building, which was approximately 1,500 square feet, flanked by canopy-covered rows of 16 to 24 parking spaces, with each space having its own payment terminal, intercom speaker system and menu board.

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