Options Trade of the Week
Sonic Corporation (NASDAQ:SONC) Calls
Monday, March 23, 2015
**Lower Oil Prices A Boon For Sonic!**
The restaurant industry is known for being fiercely competitive, and for those that can turn customers into loyal ones, these companies will certainly benefit. Now these loyal customers, with extra disposable income due to the lower gas prices, will help boost the profit flowing into the fast food chain tills.
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One such company that is benefiting from this situation is Sonic Corporation (NASDAQ:SONC), which operates and franchises a chain of drive-in restaurants, comes under the Retail-Restaurants group, and is ranked a powerful 10 on IBD's list of 197 industries.
The company, which requires a steady stream of vehicle traffic to its restaurants, is definitely applauding the decline
in oil prices. However, they do not appear to be reliant on this single factor to propel growth.
Along with the above factors, Sonics’ product innovation, growth in core menu items and a national media strategy have all contributed to the company’s strong sales during the quarter – which has been moving upwards rapidly -- its stock price increasing about 57% since September.
The Oklahoma City-based restaurant chain -- known for its retro roller-skating carhops and humorous commercials -- continues to churn out new ideas and new approaches to get people talking and more importantly visiting their stores.
Sonic will be looking to beef up earnings with new menu items and store expansion as it is slated to report fiscal second-quarter financial results Tuesday after the market closes. Consensus is for a satisfying 71% increase in earnings per share, to 12 cents, on a 13% hike in revenue to $123.6 million.
Sonic has done quite well in the
earnings picture, having beaten Wall Street earnings estimates three of the last four quarters, and met views the fourth. On March 2, Sonic pre-announced that same-store sales for the Feb. 28-ended quarter grew about 11.5%.
To combat the times when momentum is slow, and project the continual hands on approach to innovation, can be summed up with this comment from the CEO Cliff Hudson…..
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