Analyzing Sonic Corp. (SONC) & Its Rivals
Sonic Corp. (NASDAQ: SONC) is one of 22 publicly-traded companies in the “Quick Service Restaurants” industry, but how does it weigh in compared to its peers? We will compare Sonic Corp. to similar companies based on the strength of its valuation, risk, institutional ownership, dividends, earnings, profitability and analyst recommendations.
Risk and Volatility
Sonic Corp. has a beta of 1.77, meaning that its share price is 77% more volatile than the S&P 500. Comparatively, Sonic Corp.’s peers have a beta of 0.53, meaning that their average share price is 47% less volatile than the S&P 500.
Sonic Corp. pays an annual dividend of $0.56 per share and has a dividend yield of 2.3%. Sonic Corp. pays out 37.3% of its earnings in the form of a dividend. As a group, “Quick Service Restaurants” companies pay a dividend yield of 1.5% and pay out 43.1% of their earnings in the form of a dividend. Sonic Corp. is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.
This table compares Sonic Corp. and its peers’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Sonic Corp. Competitors||6.90%||12.59%||9.54%|
Earnings and Valuation
This table compares Sonic Corp. and its peers revenue, earnings per share and valuation.
|Gross Revenue||EBITDA||Price/Earnings Ratio|
|Sonic Corp.||$515.82 million||$158.68 million||16.43|
|Sonic Corp. Competitors||$3.06 billion||$846.52 million||29.49|
Sonic Corp.’s peers have higher revenue and earnings than Sonic Corp.. Sonic Corp. is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.
Insider and Institutional Ownership
79.8% of shares of all “Quick Service Restaurants” companies are owned by institutional investors. 6.2% of Sonic Corp. shares are owned by insiders. Comparatively, 16.8% of shares of all “Quick Service Restaurants” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
This is a breakdown of recent ratings and price targets for Sonic Corp. and its peers, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Sonic Corp. Competitors||326||1460||1669||85||2.43|
Sonic Corp. currently has a consensus price target of $27.67, suggesting a potential upside of 12.28%. As a group, “Quick Service Restaurants” companies have a potential upside of 10.53%. Given Sonic Corp.’s higher probable upside, research analysts clearly believe Sonic Corp. is more favorable than its peers.
Sonic Corp. peers beat Sonic Corp. on 9 of the 15 factors compared.
Sonic Corp. Company Profile
Sonic Corp. operates and franchises the chain of drive-thru restaurants (Sonic Drive-Ins) in the United States. As of August 31, 2016, 3,557 Sonic Drive-Ins were in operation from coast to coast in 45 states, consisting of 345 Company drive-thrus and 3,212 franchise drive-thrus. As of August 31, 2016, its restaurant design and construction consisted of a kitchen housed in a one-story building, which was approximately 1,500 square feet, flanked by canopy-covered rows of 16 to 24 parking spaces, with each space having its own payment terminal, intercom speaker system and menu board. At a Sonic Drive-In, a customer drives into one of the parking spaces, orders through the intercom speaker system and has the food delivered by a carhop and Sonic Drive-Ins also include a drive-thru lane and patio seating to provide customers with alternative dining options. Its food items include specialty drinks, such as cherry limeades and slushes, ice cream desserts and chicken sandwiches and hamburgers.
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