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Why Is Jack In The Box (JACK) Down 3.1% Since Last Earnings Report?
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It has been about a month since the last earnings report for Jack In The Box (JACK - Free Report) . Shares have lost about 3.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Jack In The Box due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Jack in the Box’s Q2 Earnings Beat Estimates, Rise Y/Y
Jack in the Box reported solid second-quarter fiscal 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.
Earnings & Revenues Details
During the fiscal second quarter, adjusted earnings from continuing operations came in at $1.47 per share. The figure beat the Zacks Consensus Estimate of $1.20. The metric increased 26.7% from $1.16 reported in the prior-year quarter.
Quarterly revenues of $395.7 million beat the Zacks Consensus Estimate of $383 million by 3.4%. The top line rallied 22.8% on a year-over-year basis.
Franchise rental revenues increased 9.1% year over year to $83.5 million. This figure compares to our projection of $98.1 million.
Franchise royalties and other revenues increased 14.6% year over year to $54 million. This figure compares to our projection of $53.2 million.
Franchise contributions to advertising and other services revenues rose 17.6% year over year to $55.6 million. This figure compares to our projection of $46.9 million.
Company restaurant sales during the quarter came in at $202.6 million (compared with $151.3 million reported in the prior-year quarter). This figure compares to our projection of $175.9 million.
Comps Discussion
In the quarter under review, comps at Jack in the Box’s stores increased 10.8% year over year compared with a 1.7% growth reported in the prior-year quarter. The upside was primarily driven by growth in average checks and traffic.
Same-store sales at franchised stores increased 9.4% year over year against a decline of 1.1% reported in the prior-year quarter. Systemwide same-store sales increased 9.5% year over year against a decline of 0.8% reported in the year-ago quarter.
Del Taco Performance
During second-quarter fiscal 2023, same-store sales rose 3.2%, comprising franchise same-store sales growth of 2.8% and company-operated same-store sales growth of 3.5%. During the quarter, the company reported three franchise openings. It also announced development agreements for 10 new Del Taco restaurants (in Las Vegas, Wyoming and Montana) and six Jack in the Box restaurants in Wyoming and Montana.
Operating Highlights
During the fiscal second quarter, restaurant-level adjusted margin came in at 21.4% compared with 15% in the prior-year quarter. The upside was driven by strong sales leverage and solid sales in Oklahoma and Kansas City.
Food and packaging costs (as a percentage of company restaurant sales) fell 170 basis points (bps) year over year to 29.3%.
The franchise level margin was 41.2% in the fiscal second quarter compared with 39.4% reported in the prior-year quarter. During the quarter, Franchise level margin matched our projections. During the quarter, selling, general and administrative expenses accounted for 10% of total revenues (compared with 8.8% in the prior-year quarter). This compares to our projection of 10.7%.
Balance Sheet
As of Apr 16, 2023, cash totaled $94.9 million compared with $153.8 million as of Jan 22, 2023. Inventories during the quarter came in at $5.3 million compared with $5.1 million as of Jan 22, 2023. Long-term debt (net of current maturities) totaled $1,737 million as of Apr 16, 2023, compared with $1,793.4 million at the end of Jan 22, 2023.
During the fiscal second quarter, the company repurchased nearly 0.2 million shares for an aggregate cost of $18.6 million. As of May 17, 2023, the company stated the availability of $141.6 million under its repurchase program.
The company declared a cash dividend of 44 cents per share. The dividend will be paid out on Jun 13, 2023, to shareholders on record as of May 31, 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Jack In The Box has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Jack In The Box has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Jack In The Box is part of the Zacks Retail - Restaurants industry. Over the past month, Shake Shack (SHAK - Free Report) , a stock from the same industry, has gained 8.1%. The company reported its results for the quarter ended March 2023 more than a month ago.
Shake Shack reported revenues of $253.28 million in the last reported quarter, representing a year-over-year change of +24.5%. EPS of -$0.01 for the same period compares with -$0.19 a year ago.
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Why Is Jack In The Box (JACK) Down 3.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Jack In The Box (JACK - Free Report) . Shares have lost about 3.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Jack In The Box due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Jack in the Box’s Q2 Earnings Beat Estimates, Rise Y/Y
Jack in the Box reported solid second-quarter fiscal 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.
Earnings & Revenues Details
During the fiscal second quarter, adjusted earnings from continuing operations came in at $1.47 per share. The figure beat the Zacks Consensus Estimate of $1.20. The metric increased 26.7% from $1.16 reported in the prior-year quarter.
Quarterly revenues of $395.7 million beat the Zacks Consensus Estimate of $383 million by 3.4%. The top line rallied 22.8% on a year-over-year basis.
Franchise rental revenues increased 9.1% year over year to $83.5 million. This figure compares to our projection of $98.1 million.
Franchise royalties and other revenues increased 14.6% year over year to $54 million. This figure compares to our projection of $53.2 million.
Franchise contributions to advertising and other services revenues rose 17.6% year over year to $55.6 million. This figure compares to our projection of $46.9 million.
Company restaurant sales during the quarter came in at $202.6 million (compared with $151.3 million reported in the prior-year quarter). This figure compares to our projection of $175.9 million.
Comps Discussion
In the quarter under review, comps at Jack in the Box’s stores increased 10.8% year over year compared with a 1.7% growth reported in the prior-year quarter. The upside was primarily driven by growth in average checks and traffic.
Same-store sales at franchised stores increased 9.4% year over year against a decline of 1.1% reported in the prior-year quarter. Systemwide same-store sales increased 9.5% year over year against a decline of 0.8% reported in the year-ago quarter.
Del Taco Performance
During second-quarter fiscal 2023, same-store sales rose 3.2%, comprising franchise same-store sales growth of 2.8% and company-operated same-store sales growth of 3.5%. During the quarter, the company reported three franchise openings. It also announced development agreements for 10 new Del Taco restaurants (in Las Vegas, Wyoming and Montana) and six Jack in the Box restaurants in Wyoming and Montana.
Operating Highlights
During the fiscal second quarter, restaurant-level adjusted margin came in at 21.4% compared with 15% in the prior-year quarter. The upside was driven by strong sales leverage and solid sales in Oklahoma and Kansas City.
Food and packaging costs (as a percentage of company restaurant sales) fell 170 basis points (bps) year over year to 29.3%.
The franchise level margin was 41.2% in the fiscal second quarter compared with 39.4% reported in the prior-year quarter. During the quarter, Franchise level margin matched our projections.
During the quarter, selling, general and administrative expenses accounted for 10% of total revenues (compared with 8.8% in the prior-year quarter). This compares to our projection of 10.7%.
Balance Sheet
As of Apr 16, 2023, cash totaled $94.9 million compared with $153.8 million as of Jan 22, 2023. Inventories during the quarter came in at $5.3 million compared with $5.1 million as of Jan 22, 2023. Long-term debt (net of current maturities) totaled $1,737 million as of Apr 16, 2023, compared with $1,793.4 million at the end of Jan 22, 2023.
During the fiscal second quarter, the company repurchased nearly 0.2 million shares for an aggregate cost of $18.6 million. As of May 17, 2023, the company stated the availability of $141.6 million under its repurchase program.
The company declared a cash dividend of 44 cents per share. The dividend will be paid out on Jun 13, 2023, to shareholders on record as of May 31, 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Jack In The Box has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Jack In The Box has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Jack In The Box is part of the Zacks Retail - Restaurants industry. Over the past month, Shake Shack (SHAK - Free Report) , a stock from the same industry, has gained 8.1%. The company reported its results for the quarter ended March 2023 more than a month ago.
Shake Shack reported revenues of $253.28 million in the last reported quarter, representing a year-over-year change of +24.5%. EPS of -$0.01 for the same period compares with -$0.19 a year ago.