Sonic Corp (SONC): Too Cheap To Ignore - Oppenheimer
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Oppenheimer analyst, Brian Bittner, reiterated his Outperform rating on shares of Sonic (NASDAQ: SONC) noting that the stock is under loved and under $30. The analyst is attracted to what he sees as a heavily discounted 18x P/E, 10x EBITDA and 7% FCF yield.
He sees 3 reasons to get aggressive on the name:
1) his analysis suggests minimized risk to EPS estimates through '17E
2) near-term SSS expectations are low (flattish), and it's track record of industry outperformance remains appealing
3) shifting to 95%-franchised without sacrificing EPS is under-appreciated
4) cash ($100M) and FCF ($80M) could repurchase 12% of shares, prior to more leverage
No change to the price target of $40.00
Shares of Sonic closed at $28.02 yesterday.
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