Fast Food Restaurants

Sonic Corporation

Sonic <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SONC)") else Response.Write("(Nasdaq: SONC)") end if %> Drive In restaurants aren't very well known outside its home markets of Oklahoma, Texas, and the southern states, but it is the second-largest hamburger chain in the Southwest and the country's largest drive-in restaurant operator. This is the sort of drive-in that the Fonz ate at, though, not a drive-through line where you pull up to a window. Wait staff bringing food out to the car on roller skates or in-line skates definitely makes for a different ambiance. The drive-ins supply made-to-order burgers and hot dogs, complemented by a wide selection of frozen confections.

While the income statement and same-store sales growth look great, the company is something of a cash eater, pouring more money into capital expenditures than it generates from operations. Such is the fate of a company growing in a very crowded market. Earnings per share growth has been hampered by an increase in net interest expense over the last year. Investors would probably like to see more of the company's solid operating earnings growth come to the bottom line, which may be the case as new franchises ramp up and Sonic's participation in their success increases.

Latest Financials

For the third quarter ended May 31, 1997, revenues were $48.8 million compared to $40.1 million in the FY96 third quarter. Net income for the quarter rose 12% to $5.2 million compared with $4.6 million in the third quarter of last year. On a per share basis, earnings for the third quarter of 1997 increased 15% to $0.39 versus $0.34 in the year-earlier period.

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