Last night, Sonic adjusted its earnings outlook for the fourth quarter. The restaurant chain now forecasts fourth-quarter earnings to come in at the higher end of its previously outlined range of 32 cents to 33 cents per share, versus the Street estimate of 33 cents per share. The company also reported that system-wide same-store sales remained within the company's target range of 2% to 4% during the quarter, with sales at partner drive-ins slightly above the targeted range. For fiscal 2008, Sonic expects earnings growth in the range of 15% to 17% on revenue that's up 10% to 12% for the year.
The company said it opened 61 new drive-ins during the quarter, bringing total openings for fiscal 2007 to 175.
The shares have dipped 2.4% this morning to perch on support at their 50-day moving average near the 21.95 level. However, the equity's long-term uptrend remains intact. The stock has steadily climbed along its 40-month and 20-month moving averages since June 1997.
Investors have their doubts about the shares. The Schaeffer's put/call open interest ratio for SONC comes in at 0.74, which is higher than 84% of those taken during the past 52 weeks. In other words, short-term options speculators have been more bearishly aligned only 16% of time during the past 12 months. In addition, short interest for SONC shot 6% higher in August to 8.1 million shares. At the stock's average daily trading volume, it would take 8 days to buy back all of these bearish bets, providing ample sideline money for a continued rally.