Sonic Shares Climb After Drive-In Burger Chain Boosts Forecastsby
Sonic Corp. shares rose the most in a month after the drive-in chain posted better-than-expected sales and increased its annual forecast, helped by limited-time offers and other promotions.
Systemwide comparable-store sales -- a closely watched measure -- jumped 6.5 percent last quarter, the Oklahoma City-based company said in a statement Tuesday. Analysts had estimated 1.6 percent. The chain now expects same-store sales to climb as much as 6 percent this year, up from an earlier prediction of up to 4 percent.
The stock jumped as much as 6 percent to $34.50 in New York, the biggest intraday gain since Feb. 29. That put the shares at their highest level since last March 2015.
Sonic relied on discounts and other specials to attract more customers last quarter, letting the chain maintain growth in an increasingly cutthroat fast-food industry. The company’s nostalgia appeal -- food is delivered by skating carhops -- also has helped it stand out from rivals.
“Continued strength in core menu items, combined with highly effective limited-time-offer and value-based promotions, allowed us to increase market share in a highly competitive environment,” Chief Executive Officer Cliff Hudson said in the statement.
Excluding some items, earnings rose to 18 cents a share in the second quarter, which ended Feb. 29. Analysts had estimated 16 cents on average, according to data compiled by Bloomberg. Earnings should grow as much as 25 percent this year, the company said, upgrading a projection of up to 20 percent.