Sonic Offers the Tasty Trade in Burgers
The humble hamburger has seen one of the biggest booms in terms of both offerings and sales growth.
A Lean Financial Profile
Sonic has one of the better balance sheets and returns on equity, as well as relatively low valuation within the sector. Let's look at some basic metrics using McDonald's as the bulletproof benchmark and Red Robin Gourmet Burger (NASDAQ:RRGB) as its closest competitor in term of size; both have a market cap of approximately $500 million, and a comparable number of restaurants in similar geographical locations. The below number are all based on 2012, which includes year-end estimates.
While no one can seem to touch the profit margins of McDonald's thanks to its scale and efficiency, Sonic stacks up favorably in terms of value and return on equity. The growth rate is also a respectable 15% over the past five years-- but I will admit that expansion is somewhat limited given the current concept, which relies on seasonable weather and a car culture.
See also: Sonic: Buying Calls Ahead of Earnings
For more from Steve Smith, take a FREE 14-day trial to OptionSmith and get his specific options trades emailed to you along with exclusive access to his full portfolio. Learn more.
Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter