Sonic Beats on EPS, but GAAP Results Lag

Sonic (NAS: SONC) reported earnings on March 21. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Feb. 29 (Q2), Sonic missed slightly on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue improved slightly and GAAP EPS contracted significantly.

Gross margin increased, operating margin expanded, and net margin dropped.

Revenue details
Sonic reported revenue of $115.1 million. The 14 analysts polled by S&P Capital IQ predicted revenue of $116.9 million on the same basis. GAAP reported sales were 1.4% higher than the prior-year quarter's $113.5 million.


Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.03. The 17 earnings estimates compiled by S&P Capital IQ anticipated $0.02 per share. GAAP EPS of $0.03 for Q2 were 57% lower than the prior-year quarter's $0.07 per share.


Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 50.1%, 40 basis points better than the prior-year quarter. Operating margin was 9.3%, 60 basis points better than the prior-year quarter. Net margin was 1.5%, 230 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $147.9 million. On the bottom line, the average EPS estimate is $0.20.

Next year's average estimate for revenue is $543.3 million. The average EPS estimate is $0.54.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 369 members rating the stock outperform and 49 members rating it underperform. Among 128 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 112 give Sonic a green thumbs-up, and 16 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Sonic is hold, with an average price target of $8.73.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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