Sonic Corp. (NASDAQ:SONC) is a fairly well-known company. While it has yet to reach global representation, it is growing strongly in the United States. The company is the nation’s largest chain of drive-in restaurants. It operates about 3,500 drive-ins serving approximately 3 million customers every day. Sonic’s appeal to guests are its signature menu items, including hamburgers, hot dogs and its famous ‘more than 1 million drink combinations.’ Further, the company strives for friendly service by old fashioned carhops that roller skate out to patrons vehicles; or for those choosing to sit down, up to the restaurants’ tables where patrons are seated. The company is profitable, and those profits are growing. The stock itself has almost doubled off its 52 week low of $13.63, trading at $22.50, and I expect the stock to move much higher as it has just reported a strong quarter.
The company’s same-store sales really caught my eye. Sonic saw system-wide same-store sales increase 5.3 percent, which was comprised of a 5.3 percent same-store sales increase at franchise drive-ins and an increase of 5.2 percent at company drive-ins. This drove the company’s income substantially higher versus last year’s comparable quarter. Sonic’s net income increased to $16.8 million or $0.30 per diluted share, compared with net income of $14.8 million or $0.26 per diluted share in the same period in the prior year, resulting in earnings per share growth of 15 percent.
Now, for the first nine months of Sonic’s fiscal 2014, net income totaled $29.1 million or $0.51 per diluted share compared with net income of $24.5 million or $0.43 per diluted share last year. Driving some of the growth in the third-quarter was the company’s slow but steady expansion. I must say that Sonic’s growth plans are incredibly strong in my opinion and will serve the company well in the future, as this growth can be controlled.
During the quarter, nine new franchise drive-ins and one new company drive-in were opened versus five new franchise drive-in openings during the third fiscal quarter of 2013. When we look at Sonic’s fiscal year-to-date, 22 new franchise drive-ins have opened versus nine drive-ins in the first nine months of fiscal 2013, so the growth rate, while steady and reasonable, is expanding. I also like that the company is repurchasing shares to help increase cash available to investors, perhaps as a dividend in the future, or to fund further expansion efforts.