SONC  Sonic Corp.

Exchange

NASDAQ

Sector

Consumer Services

Industry

Restaurants

Market Cap.

1.18B

Vuru Grade

52.92/100

Current Price

$26.95
+0.36 (+1.35%)

Growth Price

$14.49
Overvalued by 46.23%

Company Metrics

  • P/E 20.16
  • P/S 1.98
  • P/B 92.26
  • EPS 1.34
  • Cash ROIC 11.78%
  • Cash Ratio 0.97
  • Dividend 0.56 / 2.11%
  • Avg. Vol. 835,187.00
  • Shares 49.67M
  • Market Cap. 1.18B

Company Description

Sonic Corp. operates and franchises a chain of quick-service drive-in restaurants in the United States. As of June 22, 2011, it operated and franchised approximately 3,500 drive-ins. It also leases signs and real estate. The company was founded in 1953 and is headquartered in Oklahoma City, Oklahoma.... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Why Sonic Corp. Stock Dropped Today
Motley Fool - Jun 24, 2016
What: Shares of Sonic Corp. (NASDAQ:SONC) dove today after the company posted a disappointing growth outlook in its third-quarter earnings report last night.
Sonic Corp. | $SONC Stock | Shares Down On Lower Than Expected Guidance ... - TickerTV News (press release)
Why Sonic Corp. Stock Slipped 13% in May
Motley Fool - Jun 8, 2016
What: Shares of fast-food burger chain Sonic Corp. (NASDAQ:SONC) dipped 13% last month, according to data from S&P Global Market Intelligence, as the company gave a mid-month sales warning.
Here's Why Sonic Corp. Dropped 12% in October (but Recovered)
Motley Fool - Nov 14, 2016
"We delivered good overall performance in fiscal 2016, including 2.6% systemwide same-store-sales growth," said Cliff Hudson, Sonic Corp. CEO. "Slowing consumer trends that began in April, however, persisted through the fourth quarter, resulting in ...
Will Sonic Corp. (NASDAQ:SONC) beat earning estimates again? - The Independent Republic
Why Did Sonic Corp. Shares Lose 16% in 2016?
Motley Fool - Jan 12, 2017
Those are decent results for this market, but the slow growth and inconsistent quarter-by-quarter numbers clearly dragged the chain's share price down over the course of the year.
Why Sonic Corporation Stock Got Zonked Today
Motley Fool - Oct 25, 2016
Shares of fast-food drive-in chain Sonic Corporation (NASDAQ:SONC) were tanking today after the company issued a weak fourth-quarter earnings report and even weaker guidance for fiscal 2017.
Stock Update (NASDAQ:SONC): Sonic Corporation Announces Fourth Fiscal Quarter ... - Smarter Analyst
3 Stocks to Watch on Tuesday: Sonic Corporation (SONC), Visa Inc (V) and Zions ... - Investorplace.com
Why Sonic Corp. Shares Jumped 19% in 2015
Motley Fool - Jan 10, 2016
What: Shares of Sonic Corp. (NASDAQ:SONC) rode the tailwinds in the fast-food market to a 19% gain last year, according to data from S&P Capital IQ.
Sonic Corporation: 10% Sell-Off After Earnings Is Ridiculous
Motley Fool - Jul 10, 2015
On June 23rd, shares of Sonic Corp (NASDAQ:SONC) plunged 10% after the company reported weaker-than-expected earnings for the fiscal third quarter.
Why Sonic Corporation Stock Popped Today
Motley Fool - Oct 20, 2015
In total during the fiscal year, Sonic opened 41 new drive-ins (including 18 during the quarter) and rebuilt 30 locations. That translated to a 22.8% increase in adjusted net income to $23.1 million, and -- thanks to Sonic's decision to spend $124 ...
Sonic Corporation: A Superb Business Model With Favorable Prospects And ...
Seeking Alpha - Aug 19, 2015
Amidst the recent global economic uncertainty, investors should turn to stocks with fundamentally sustainable domestic profits. Low oil, the strong Dollar, and the prevalence of Millennials are all working in Sonic's favor. Sonic's business model ...
Sonic Corporation Wakes Up After A Long Period Of Hibernation
Seeking Alpha - Nov 30, 2015
Sonic's performance has been poor since 2010, but after stepping up unit closures, they are slowly limping back to normalcy.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for SONC to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate SONC's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$26.95 Current Price

$14.49 Growth Price (DCF)

Overvalued by 46.23%


Growth Rate Assumed by Market: 27.95%


Future Free Cash Flow Growth Rate: 14.2%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$-0.95 Book Price

Overvalued by 103.53%


Growing Cash Return on Invested Capital over the past 5 years

SONC has continued to efficiently invest its financial resources in buildings, projects, and equipment, resulting in increasingly stronger returns. Look at its Annual Reports to determine future sustainability.

SONC has created $11.78 of cash for every $100 invested.
Figures in USD. Fiscal year ends in August
20122013201420152016
Free Cash Flow 70.95M 46.50M 24.54M 94.21M 69.66M
divided by
Invested Capital 547.60M 509.97M 535.77M 505.01M 513.24M
Cash ROIC 12.96% 9.12% 4.58% 18.65% 13.57%

Varying Return on Equity over the past 5 years

SONC has generated strong profits with money shareholders have invested. However, there is a substantial variation in their Return on Equity from year-to-year. This may reflect management's inability to generate consistent returns or may be caused by one-time events. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

SONC has generated $110.93 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in August
20122013201420152016
Net Income 36.09M 36.70M 47.92M 64.49M 64.07M
divided by
Stockholders' Equity 59.25M 77.46M 62.68M 17.43M -75.64M
Return on Equity 60.91% 47.38% 76.45% 369.90% -

Excellent Business Performance over the past 10 years

SONC has been able to maintain profitability in good times and bad. This could mean SONC has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

SONC has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in August
2007200820092010201120122013201420152016
Free Cash Flow 9.65M 21.72M 52.51M 53.14M 62.90M 70.95M 46.50M 24.54M 94.21M 69.66M

Very Weak Balance Sheet

SONC is in a poor financial position. This could be due to a slowdown in sales, indulging in debt-fuelled growth, or the nature of SONC's business. If it is highly capital intensive (see Economic Moat), they likely have to outlay significant capital just to stay competitive. This habit often destroys more value than it creates.
Figures in USD. Fiscal year ends in August
2007200820092010201120122013201420152016
Cash 38.95M 59.20M 137.60M 86.04M 29.51M 52.65M 77.90M 35.69M 27.19M 72.09M
Current Assets 73.70M 99.43M 202.13M 133.93M 93.46M 107.15M 140.72M 95.71M 85.44M 137.66M
Total Assets 758.52M 836.31M 849.04M 737.32M 679.74M 680.76M 660.79M 650.97M 620.02M 660.00M
Current Liabilities 114.49M 112.54M 117.32M 118.61M 71.28M 80.52M 72.93M 79.51M 87.82M 74.66M
Total Liabilities 865.32M 900.43M 853.31M 714.98M 628.05M 621.51M 583.33M 588.30M 602.59M 735.64M
Stockholder' Equity -106.80M -64.12M -4.27M 22.34M 51.70M 59.25M 77.46M 62.68M 17.43M -75.64M
Current Ratio 0.64 0.88 1.72 1.13 1.31 1.33 1.93 1.20 0.97 1.84
TL-to-TA 1.14 1.08 1.01 0.97 0.92 0.91 0.88 0.90 0.97 1.11

Consistent Reinvestment of Profits over the past 10 years

SONC has consistently retained profits. This may put SONC in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, SONC can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in August
2007200820092010201120122013201420152016
Retained Earnings 540.89M 599.96M 649.40M 670.49M 687.43M 722.61M 758.14M 801.20M 851.72M 894.44M
Retained Earnings Growth - 10.92% 8.24% 3.25% 2.53% 5.12% 4.92% 5.68% 6.30% 5.02%

Competitive Industry over the past 10 years

SONC is likely operating in an industry with medium to low barriers to entry. This may mean that SONC doesn't have a characteristic that's hard to replicate, such as exclusive distribution, branding or the ability to keep costs low. If Gross Margins are at least satisfactory, it's likely that SONC invests heavily in R&D and Sales, General & Administrative expenses.

Only $7.34 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in August
2007200820092010201120122013201420152016
Net Income 64.19M 60.32M 49.44M 21.21M 19.23M 36.09M 36.70M 47.92M 64.49M 64.07M
divided by
Revenue 770.47M 804.71M 718.79M 550.93M 545.95M 543.73M 542.59M 552.35M 606.09M 606.32M
Net Profit Margin 8.33% 7.50% 6.88% 3.85% 3.52% 6.64% 6.76% 8.67% 10.64% 10.57%

Satisfactory Pricing Power over the past 10 years

Consistency is vital. SONC has been able to maintain gross margins fairly consistently, which is a strong indication of their ability to raise prices with inflation. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$36.36 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in August
2007200820092010201120122013201420152016
Gross Profit 276.95M 256.61M 238.56M 196.27M 190.66M 196.26M 199.38M 210.24M 242.15M 249.50M
divided by
Revenue 770.47M 804.71M 718.79M 550.93M 545.95M 543.73M 542.59M 552.35M 606.09M 606.32M
Gross Margin 35.95% 31.89% 33.19% 35.62% 34.92% 36.10% 36.75% 38.06% 39.95% 41.15%

High Capital Intensity over the past 10 years

SONC spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

112.96% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in August
2007200820092010201120122013201420152016
Capital Expenditure 111.37M 105.43M 36.15M 24.47M 21.20M 24.18M 41.34M 79.01M 42.15M 46.55M
divided by
Net Income 64.19M 60.32M 49.44M 21.21M 19.23M 36.09M 36.70M 47.92M 64.49M 64.07M
Capital Expenditure Ratio 173.49% 174.78% 73.11% 115.37% 110.27% 66.99% 112.63% 164.89% 65.37% 72.66%

No Dividend History over the past 10 years

SONC has never distributed dividends or has recently suspended their dividend distribution.
Figures in USD. Fiscal year ends in August
2007200820092010201120122013201420152016
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 70.54M 62.18M 61.24M 61.58M 61.94M 60.17M 57.19M 56.62M 53.95M 49.67M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 22.36 11.66 10.41 10.12 6.73 10.23 20.34 27.26 32.80 26.51
Dividend Yield - - - - - - - - - -

Strong History of Stock Buybacks over the past 10 years

SONC has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in August
2007200820092010201120122013201420152016
Shares Outstanding 70.54M 62.18M 61.24M 61.58M 61.94M 60.17M 57.19M 56.62M 53.95M 49.67M
Stock Bought Back - 13.44% 1.55% -0.55% -0.59% 2.94% 5.21% 1.01% 4.94% 8.63%
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