) recently approved of a new stock repurchase program, thereby
maintaining the trend of returning wealth to its shareholders from
time to time, depending on market conditions. Under this program,
the company is authorized to repurchase up to $40.0 million of its
common stock by August 31, 2013.
Earlier, on October 13, 2011, the company's Board of Directors
had allocated up to $30.0 million for common stock repurchase
through August 31, 2012. During the first nine months of fiscal
2012, the company bought back 3.5 million shares for about $25.5
million. In the third quarter of 2012, this Oklahoma-based company
completed the buyback of the remaining shares under its existing
At the end of third-quarter 2012, the company had current assets
worth $41.6 million. At the end of the quarter, shareholders'
equity and long-term debt due after one year stood at $48.9 million
and $470.6 million, respectively. Management expects to generate
free cash flow of approximately $50-$55 million in fiscal 2012,
which will help fund this new repurchase program.
The increase in share buyback authorization reflects the
company's confidence in its fundamentals. At the same time, the
share buyback will help the company reduce the share count, thereby
increasing earnings per share and return on equity. Apart from
bolstering shareholders' value, this strategic move will also lift
the relatively undervalued share price.
Sonic is gradually moving in a positive direction. Increasing
focus on franchising, expansion of drive-in facilities, comps
improvement, execution of a point-of-sale system and effective
utilization of cash are on Sonic's long-term wish list.
Sonic, which competes with the likes of
Panera Bread Co.
BJ's Restaurants Inc.
), currently carries a Zacks #3 Rank, which translates into a
short-term Hold rating. We are maintaining our long-term Outperform
recommendation on the stock.
BJ'S RESTAURANT (BJRI): Free Stock Analysis
PANERA BREAD CO (PNRA): Free Stock Analysis
SONIC CORP (SONC): Free Stock Analysis Report
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