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Jack in the Box (JACK) Q3 Earnings Beat Estimates, Stock Up
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Jack in the Box Inc. (JACK - Free Report) reported solid third-quarter fiscal 2020 results, wherein earnings and revenues not only surpassed the Zacks Consensus Estimate but also increased on a year-over-year basis. Following the quarterly results, shares of the company inched up 4.2% during after-hour trading on Aug 5.
Adjusted earnings from continuing operations came in at $1.37 per share, beating the Zacks Consensus Estimate of $1.01 by 35.6%. The metric also increased 28% from $1.07 reported in the prior-year quarter.
Jack In The Box Inc. Price, Consensus and EPS Surprise
During the fiscal third quarter, total revenues of $242.3 million surpassed the Zacks Consensus Estimate of $237 million by 2.4%. Moreover, the top line grew 9% on a year-over-year basis.
Franchise rental revenues increased 20.0% year over year to $76 million. The increase was primarily backed by the adoption of ASC 842 as well as higher percentage rent revenues due to a rise in franchise restaurant sales.
Franchise royalties and other revenues increased 7.6% year over year to $43.2 million owing to a rise in franchise same-store sales.
Franchise contributions to advertising and other services revenues increased 0.5% year over year to $40.6 million. The increase was primarily due to a rise in technology and sourcing fees, partially offset by a drop in marketing contributions.
Comps Discussion
Comps at Jack in the Box’s stores increased 4.1% in the fiscal third quarter compared with 2.8% growth in the prior-year quarter. This upside can be attributed to average check growth of 20.2%. However, transactions declined 16.1% in the quarter.
Same-store sales at franchised stores grew 6.9% compared with 2.7% growth in the prior-year quarter. Meanwhile, system-wide same-store sales increased 6.6% compared with 2.7% growth in the year-ago quarter.
Operating Highlights
Restaurant-level adjusted margin contracted 160 basis points (bps) in the fiscal third quarter from the year-ago quarter to 25.4%. The downside can be primarily attributed to wage inflation along with a rise in delivery fees and supply costs owing to the coronavirus pandemic. Also, commodity costs increased 3.6% year over year on high beef costs.
However, food and packaging costs decreased 20 bps owing to rise in menu prices, partially offset by higher ingredient costs.
Franchise level margin was 41.5% in the fiscal third quarter compared with 42.4% in the prior-year quarter.
During the fiscal third quarter, selling, general and administrative expenses accounted for 5.6% of total revenues compared with 11% in the prior-year quarter.
Balance Sheet
As of Jul 5, 2020, cash (inclusive of restricted cash) totaled $196.9 million compared with $151.6 million as of Sep 29, 2019. Inventories during the quarter increased 3.3% year over year to $1.8 million. Long-term debt totaled $1,366.2 million as of Jul 5, 2020, compared with $1,274.4 million at the end of Sep 29, 2019. Cash flow from operating activities declined to $90.2 million in the fiscal third quarter from $116.8 million in the prior-year quarter.
Jack in the Box currently has $122 million left under the share repurchase authorization, out of which $22 million will expire in November 2020 and the remaining $100 million will expire in November 2021. The company has temporarily suspended its share repurchase program.
On Jul 31, the company declared a cash dividend of 40 cents per share. The dividend will be paid out on Sep 3, 2020, to shareholders on record as of Aug 18, 2020.
Other top-ranked stocks in the same space include Domino's Pizza, Inc. (DPZ - Free Report) , Papa John's International, Inc. (PZZA - Free Report) and El Pollo Loco Holdings, Inc. (LOCO - Free Report) . Domino's sports a Zacks Rank #1, while Papa John's and El Pollo Loco carry a Zacks Rank #2.
Domino's has a trailing four-quarter earnings surprise of 18.6%, on average.
Papa John's has a three-five year earnings per share growth rate of 8%.
Earnings in 2021 for El Pollo Loco are expected to surge 33.2%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
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Jack in the Box (JACK) Q3 Earnings Beat Estimates, Stock Up
Jack in the Box Inc. (JACK - Free Report) reported solid third-quarter fiscal 2020 results, wherein earnings and revenues not only surpassed the Zacks Consensus Estimate but also increased on a year-over-year basis. Following the quarterly results, shares of the company inched up 4.2% during after-hour trading on Aug 5.
Adjusted earnings from continuing operations came in at $1.37 per share, beating the Zacks Consensus Estimate of $1.01 by 35.6%. The metric also increased 28% from $1.07 reported in the prior-year quarter.
Jack In The Box Inc. Price, Consensus and EPS Surprise
Jack In The Box Inc. price-consensus-eps-surprise-chart | Jack In The Box Inc. Quote
Revenue Details
During the fiscal third quarter, total revenues of $242.3 million surpassed the Zacks Consensus Estimate of $237 million by 2.4%. Moreover, the top line grew 9% on a year-over-year basis.
Franchise rental revenues increased 20.0% year over year to $76 million. The increase was primarily backed by the adoption of ASC 842 as well as higher percentage rent revenues due to a rise in franchise restaurant sales.
Franchise royalties and other revenues increased 7.6% year over year to $43.2 million owing to a rise in franchise same-store sales.
Franchise contributions to advertising and other services revenues increased 0.5% year over year to $40.6 million. The increase was primarily due to a rise in technology and sourcing fees, partially offset by a drop in marketing contributions.
Comps Discussion
Comps at Jack in the Box’s stores increased 4.1% in the fiscal third quarter compared with 2.8% growth in the prior-year quarter. This upside can be attributed to average check growth of 20.2%. However, transactions declined 16.1% in the quarter.
Same-store sales at franchised stores grew 6.9% compared with 2.7% growth in the prior-year quarter. Meanwhile, system-wide same-store sales increased 6.6% compared with 2.7% growth in the year-ago quarter.
Operating Highlights
Restaurant-level adjusted margin contracted 160 basis points (bps) in the fiscal third quarter from the year-ago quarter to 25.4%. The downside can be primarily attributed to wage inflation along with a rise in delivery fees and supply costs owing to the coronavirus pandemic. Also, commodity costs increased 3.6% year over year on high beef costs.
However, food and packaging costs decreased 20 bps owing to rise in menu prices, partially offset by higher ingredient costs.
Franchise level margin was 41.5% in the fiscal third quarter compared with 42.4% in the prior-year quarter.
During the fiscal third quarter, selling, general and administrative expenses accounted for 5.6% of total revenues compared with 11% in the prior-year quarter.
Balance Sheet
As of Jul 5, 2020, cash (inclusive of restricted cash) totaled $196.9 million compared with $151.6 million as of Sep 29, 2019. Inventories during the quarter increased 3.3% year over year to $1.8 million. Long-term debt totaled $1,366.2 million as of Jul 5, 2020, compared with $1,274.4 million at the end of Sep 29, 2019. Cash flow from operating activities declined to $90.2 million in the fiscal third quarter from $116.8 million in the prior-year quarter.
Jack in the Box currently has $122 million left under the share repurchase authorization, out of which $22 million will expire in November 2020 and the remaining $100 million will expire in November 2021. The company has temporarily suspended its share repurchase program.
On Jul 31, the company declared a cash dividend of 40 cents per share. The dividend will be paid out on Sep 3, 2020, to shareholders on record as of Aug 18, 2020.
Zacks Rank & Other Key Picks
Jack in the Box currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other top-ranked stocks in the same space include Domino's Pizza, Inc. (DPZ - Free Report) , Papa John's International, Inc. (PZZA - Free Report) and El Pollo Loco Holdings, Inc. (LOCO - Free Report) . Domino's sports a Zacks Rank #1, while Papa John's and El Pollo Loco carry a Zacks Rank #2.
Domino's has a trailing four-quarter earnings surprise of 18.6%, on average.
Papa John's has a three-five year earnings per share growth rate of 8%.
Earnings in 2021 for El Pollo Loco are expected to surge 33.2%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>