Sonic beats Wall Street, but sales are sagging

But if there's a positive side of the line, then there stands to reason that there's a negative side of the line, too. And I'm throwing sales performance on the negative side. Net revenues dipped 10%. Same-store sales decreased well over 5%. I like neither of those two statistics.

And even though the bottom line defeated the analysts and their holy expectations, the profit generated in Q3 wasn't tough enough to improve on last year's performance. Unfortunately, Sonic earned 28 cents per share one year ago.

Hopefully, the refranchising initiative mentioned in the release will help turn things around. In addition, Sonic simply needs to change the way it markets its brand. I've seen some of the broadcast commercials. They're not bad, actually. They have a cool sense of humor to them. Obviously, though, the company will have to step up its game and become more competitive. Fast-food chains oftentimes talk about altering menu dynamics to drive sales. Don't get me wrong, the menu is clearly of fundamental importance. But increasing brand equity, improving the image and perception surrounding the Sonic experience, is likewise of vital concern.

The company received an upgrade this week, as mentioned in this article. And the stock, like I said earlier, is receiving an upgrade by bidding investors (in fact, as I write this sentence, shares are now up over 14%!). Is the buying overdone? My opinion: yes. Don't buy today is what I would say to someone who asked me what to do about Sonic. The decision, as always, belongs to the reader, but I wouldn't buy Sonic right now considering the sales figures and the rally it's currently experiencing.

Disclosure: I don't own any company mentioned; positions can change without notice.