Sonic Corp. (SONC) Down on Lower Full Year Guidance
Shares of Oklahoma City, Oklahoma, based Sonic Corp. (SONC) fell on Tuesday, against the backdrop of a generally higher day for stocks overall. Sonic's stock closed down 10.26%, falling $3.51 per share, to close at $30.71, on volume of 9,311,632 shares. Though the company reported improved results for the fiscal 2015 third quarter, the company's full year guidance came in below analysts expectations.
Sonic's financial results for the fiscal 2015 third-quarter ended May 31, came in higher than expected. However, the company's full-year guidance is below analysts expectations. In addition, same-store sales growth was reported at 6.1% for the quarter, a steep drop from the 11% increase reported in the previous quarter. Investors focused on the negative information, causing the stock to fall in price by more than 10%.
Net income per diluted share was $0.38, a significant increase over the $0.30 per diluted share for the same quarter a year earlier. Analysts had expected earnings per share of $0.37. For the quarter, the company's net income came in at $20.4 million, compared to $16.8 million for the same quarter last year. Year to date numbers were equally impressive. For the first nine months of fiscal 2015, net income was $38.2 million, or $0.70 per diluted share. For the first nine months of fiscal 2014, that income was $29.1 million, or $0.51 per diluted share. The year to date 2015 net income represents a 27% increase over the same timeframe during fiscal 2014.
The situation was similar with revenues. Fiscal 2015 third-quarter revenues came in at $164.7 million, compared to $152.2 million for the fiscal 2014 third-quarter. For the nine months ended May 31, year-to-date revenues were reported at $430.8 million, compared to $388.6 million for the first three quarters of fiscal 2014.
But investors focused on forward guidance and on the decrease in the growth of same store sales.
Though Sonic increased its earnings growth expectation for fiscal 2015 to 27% to 29%, from the previous estimate of 25% to 27%, analysts had been expecting growth of 30%. The company cited the "macroeconomic environment as having an impact on sales.
The company is largely discounting the decline in same-store sales. They attributed the decline to the adverse affect of the severe winter weather.
"We are very pleased with our strong sales and financial performance driven by a healthy mix of traffic and check," said Cliff Hudson, Sonic Corp. CEO. "Our results are especially noteworthy given our strong results from the same quarter prior year. New product news in key categories, effective media and a layered promotional strategy are expected to continue to drive our sales in the near term. Technology initiatives designed to provide a more personalized and customized customer experience are also expected to complement our product and media initiatives and drive sales over the next several years."
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