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Jack in the Box (JACK) Q3 Earnings & Sales Beat Estimates
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Jack in the Box Inc.(JACK - Free Report) reported decent third-quarter fiscal 2016 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Notably, the company reported weak comps at its namesake Jack in the Box restaurants due to increased competitive pressure.
Earnings and Revenue Discussion
Adjusted earnings of $1.07 per share surpassed the Zacks Consensus Estimate of 87 cents by 22.98%. Further, the bottom line surged 40.8% year over year on reduced expenses and lower tax rate.
Sales of $368.9 million marginally beat the Zacks Consensus Estimate of $367 million by 0.52%. The top line also inched up approximately 2.62% on a year-over-year basis.
Comparable-store sales (comps) at the Jack in the Box company stores slipped 0.2% as against a gain of 5.5% last year. Same store sales at franchised stores were up 1.5% compared with a gain of 7.9% last year. System stores inched up1.1% as against a gain of 7.3% in the previous year.
The underperformance was attributable to weak sales in breakfast and lunch day parts owing to competitive pressures since many other restaurateurs introduced aggressive value offers.
Comps at company-owned Qdoba restaurants were up 1% compared with 6.6% increase reported a year ago. Comps at franchised restaurants saw 0.1% comps growth during the quarter as against a gain of 9% reported a year ago. System same-store sales were up 0.6% backed by an increase in transactions and growth in catering sales. The segment reported a gain of 7.7% a year ago.
The company’s consolidated restaurant operating margin was 21.9% of total sales, up 10 basis points (bps) year over year. Restaurant operating margin expanded 50 bps for the Jack in the Box company restaurants backed by favorable food and packaging costs. Operating margin contracted 80 bps at the Qdoba restaurants. For Qdoba, costs associated with new restaurant openings and higher promotional activity resulted in the deterioration in operating margin.
SG&A expenses for the fiscal third quarter, as a percentage of revenues, were 11.6%. This was down 260 bps from the prior-year quarter. The decrease reflects lower incentive compensation, and a decline in pension and postretirement benefits related to the company's qualified pension plan.
Fiscal Fourth-Quarter Comps Guidance
For the fiscal fourth quarter, the company expects same-store sales to grow in the range of 1–2 % as against the year-ago comps growth of 4.1% at the Jack in the Box restaurants. The guidance reflects the lower comps in the third quarter.
For the Qdoba restaurants, same-store sales are projected to grow in the range of 1–2% compared with the year-ago quarter comps growth of 6.1%.
Fiscal 2016 Guidance
Earnings per share, excluding restructuring charges and gains or losses from refranchising, are expected in the range of $3.65 to $3.75 in fiscal 2016. The Zacks Consensus Estimate stands at $3.56 per share.
The company expects comps to be flat to up 0.5% at the Jack in the Box company restaurants as against the previous expectation of comps growth of 1–2%. At the Qdoba restaurants, comps are expected to increase approximately 1.5–2.5%.
Commodity deflation is expected to be approximately 2–3% at Jack in the Box restaurants and approximately 5% at Qdoba.
Jack in the Box carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the same industry include Del Taco Restaurants, Inc.(), Dave & Buster's Entertainment, Inc. (PLAY - Free Report) and Papa John's International Inc. ((PZZA - Free Report) ). While Dave & Buster’s sports a Zacks Rank #1 (Strong Buy), the other two stocks hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Jack in the Box (JACK) Q3 Earnings & Sales Beat Estimates
Jack in the Box Inc.(JACK - Free Report) reported decent third-quarter fiscal 2016 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Notably, the company reported weak comps at its namesake Jack in the Box restaurants due to increased competitive pressure.
Earnings and Revenue Discussion
Adjusted earnings of $1.07 per share surpassed the Zacks Consensus Estimate of 87 cents by 22.98%. Further, the bottom line surged 40.8% year over year on reduced expenses and lower tax rate.
Sales of $368.9 million marginally beat the Zacks Consensus Estimate of $367 million by 0.52%. The top line also inched up approximately 2.62% on a year-over-year basis.
JACK IN THE BOX Price, Consensus and EPS Surprise
JACK IN THE BOX Price, Consensus and EPS Surprise | JACK IN THE BOX Quote
Behind the Headline
Comparable-store sales (comps) at the Jack in the Box company stores slipped 0.2% as against a gain of 5.5% last year. Same store sales at franchised stores were up 1.5% compared with a gain of 7.9% last year. System stores inched up1.1% as against a gain of 7.3% in the previous year.
The underperformance was attributable to weak sales in breakfast and lunch day parts owing to competitive pressures since many other restaurateurs introduced aggressive value offers.
Comps at company-owned Qdoba restaurants were up 1% compared with 6.6% increase reported a year ago. Comps at franchised restaurants saw 0.1% comps growth during the quarter as against a gain of 9% reported a year ago. System same-store sales were up 0.6% backed by an increase in transactions and growth in catering sales. The segment reported a gain of 7.7% a year ago.
The company’s consolidated restaurant operating margin was 21.9% of total sales, up 10 basis points (bps) year over year. Restaurant operating margin expanded 50 bps for the Jack in the Box company restaurants backed by favorable food and packaging costs. Operating margin contracted 80 bps at the Qdoba restaurants. For Qdoba, costs associated with new restaurant openings and higher promotional activity resulted in the deterioration in operating margin.
SG&A expenses for the fiscal third quarter, as a percentage of revenues, were 11.6%. This was down 260 bps from the prior-year quarter. The decrease reflects lower incentive compensation, and a decline in pension and postretirement benefits related to the company's qualified pension plan.
Fiscal Fourth-Quarter Comps Guidance
For the fiscal fourth quarter, the company expects same-store sales to grow in the range of 1–2 % as against the year-ago comps growth of 4.1% at the Jack in the Box restaurants. The guidance reflects the lower comps in the third quarter.
For the Qdoba restaurants, same-store sales are projected to grow in the range of 1–2% compared with the year-ago quarter comps growth of 6.1%.
Fiscal 2016 Guidance
Earnings per share, excluding restructuring charges and gains or losses from refranchising, are expected in the range of $3.65 to $3.75 in fiscal 2016. The Zacks Consensus Estimate stands at $3.56 per share.
The company expects comps to be flat to up 0.5% at the Jack in the Box company restaurants as against the previous expectation of comps growth of 1–2%. At the Qdoba restaurants, comps are expected to increase approximately 1.5–2.5%.
Commodity deflation is expected to be approximately 2–3% at Jack in the Box restaurants and approximately 5% at Qdoba.
Jack in the Box carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the same industry include Del Taco Restaurants, Inc. (), Dave & Buster's Entertainment, Inc. (PLAY - Free Report) and Papa John's International Inc. ((PZZA - Free Report) ). While Dave & Buster’s sports a Zacks Rank #1 (Strong Buy), the other two stocks hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>