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Author Topic: Amazing where you can find an opportunity  (Read 678 times)

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Biggus Piggus

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Amazing where you can find an opportunity
« on: January 08, 2015, 08:31:38 am »


This is not a recommendation, just a recap of history. Sonic (SONC), the fast-food chain, is up 350% since the beginning of 2012. Earnings per share improved from $0.55 in calendar 2011 to $0.90 in 2014 and an estimated $1.09 for 2015. Why does the stock rise 350% when earnings haven't even doubled? Growth rate. SONC grew EPS 10% in 2011 but has been growing close to 20% annually in recent years. The valuation in early 2012 reflected widespread expectations that Sonic was a slow-growth company.

Sonic just reported quarterly earnings 10% better than the Street expected, and the stock jumped 10% on the news. They're not really growing sales much. Just improving the profitability of sales.

The Chief

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Re: Amazing where you can find an opportunity
« Reply #1 on: January 12, 2015, 06:34:02 pm »

I believe it.  They are saving money on food costs by delivering an inferior product and saving money on labor by reducing employees on the clock (as it takes a lot longer than it used to in order to get your food), in my opinion.  Sonic ain't what it used to be...at least in Georgia.

But, in most regions, they do have a monopoly on the drive-in style restaurant which drives the customer base.

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Re: Amazing where you can find an opportunity
« Reply #2 on: January 14, 2015, 09:07:16 am »

Look at Chipotle over the last 5 years. REDIC.
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