Earnings Preview: Sonic Corp.

Sonic Corporation (SONC) is expected to report Q4 earnings Thursday after the  close, with a conference call scheduled for 10:00 am ET Friday Oct. 17.

Guidance

Analysts are looking for a profit of 33c on revenue of $228.59M. The consensus range is 32c to 34c for EPS, and revenue of $221.8M to $238.72M, according to First Call. In June, the company forecast FY08 EPS $1.00 to $1.02 vs. First Call consensus of 98c. On September 26, Sonic CFO Stephen Vaughan said that franchisees have been notified by GE Capital, one of its approved lenders that it will temporarily stop financing new loans. The company later commented that GE Capital provided less than 10% of its financing. To help sales and operations Sonic with 3,400 drive-in restaurants in the U.S., wants to re-franchise hundreds of company-owned locations, the Wall Street Journal reported on October 1, although it may face problems due to the credit crisis.

In an October 1 statement, Sonic said the current state of the U.S. economy was challenging and could become more so, but that Sonic and its franchisees "are positioned for future growth and increased development." On September 24, Sonic said FY08 same-store sales were positive, although partner drive-in sales declined for Q4 and FY08.

Analyst Views

Stifel Nicolaus analyst Steve West said the impact from Hurricane Ike is much worse than previously expected because of massive power outages but expects new products will drive sales and boost margins.

KeyBanc analyst Lynne Collier believes the company, which has significant exposure to rising dairy and beef costs, will be impacted by higher commodity costs and softening consumer spending.