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Why Is Jack In The Box (JACK) Up 2.9% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Jack In The Box Inc. (JACK - Free Report) . Shares have added about 2.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Jack in the Box Lags Q1 Earnings & Revenue Estimates
Jack in the Box reported lower-than-expected first-quarter fiscal 2017 results, wherein both earnings and revenues missed the Zacks Consensus Estimate.
Earnings and Revenue Discussion
Adjusted earnings of $1.18 per share lagged the Zacks Consensus Estimate of $1.24 by 4.8%. However, the bottom line surged nearly 27% year over year on reduced SG&A expenses.
Sales of $487.9 million missed the Zacks Consensus Estimate of $498.5 million by over 2%. However, the top line grew 3.6% on a year-over-year basis.
Behind the Headline Numbers
Comparable-store sales (comps) at the Jack in the Box company stores inched up 0.6%, compared with the gain of 0.5% in the prior-year quarter. Same store sales at franchised stores were up 3.9% higher than the gain of 1.8% in the year-ago quarter. System stores increased 3.1% as against a gain of 1.4% in the comparable period last year.
Comps at company-owned Qdoba restaurants were down 1.4% reflecting a 2.5% decrease in transactions, partially offset by growth in average check and catering sales. However, comps had increased 1.5% in the year-ago period. Comps at franchised restaurants saw 0.5% dip during the quarter compared with a gain of 2.1% reported a year ago. Also, system same-store sales were down 1.0% compared with a gain of 1.8% in the year-ago quarter.
The company’s consolidated restaurant operating margin was 18.6% of total sales, down 90 basis points (bps) year over year. Restaurant operating margin expanded 70 bps for the Jack in the Box company restaurants backed by favorable food and packaging costs. However, operating margin contracted 350 bps at the Qdoba restaurants. For Qdoba, costs associated with new restaurant openings, higher promotional activity, elevated labor expenses and sales deleverage resulted in the deterioration in operating margin.
SG&A expenses for the fiscal first quarter, as a percentage of revenues, were 11.4%. This was down 260 bps from the prior-year quarter. The decrease reflects the impact of the company's restructuring activities, a decline in pension and postretirement benefits and lower incentive compensation.
Fiscal Second-Quarter 2017 Comps Guidance
For the second quarter of fiscal 2017, the company expects same-store sales to remain flat to down 2% compared with the year-ago flat comps at the Jack in the Box restaurants.
For the Qdoba restaurants, same-store sales are projected to be down in the range of 1-3%, compared with the year-ago quarter comps growth of 3.1%.
Fiscal 2017 Guidance
Earnings per share, excluding restructuring charges and gains or losses from refranchising, are expected to be in the range of $4.25 to $4.45 in fiscal 2017. This is lower than the previous guidance of $4.55 to $4.75 per share. The Zacks Consensus Estimate of $4.73 per share is higher than the company’s expectation.
The company expects comps to grow approximately 2% at Jack in the Box system restaurants and to remain flat y/y at Qdoba company restaurants.
Consolidated restaurant operating margin is expected to be roughly in the band of 19.5% to 20% as compared with the previous expectation in the range of 20% to 21%.
The company also anticipates to open approximately 20 to 25 new Jack in the Box restaurants system-wide, the majority of which will be franchise locations. In addition, approximately 50 to 60 new Qdoba restaurants are expected to be opened, of which about 30 are likely to be company locations.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been seven downward revisions for the current quarter. In the past month, the consensus estimate also shifted downward by 14.7% due to these changes.
At this time, Jack In The Box's stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable solely for growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Notably, the stock has a Zacks Rank #4 (Sell). We are expecting an below average return from the stock in the next few months.
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Why Is Jack In The Box (JACK) Up 2.9% Since the Last Earnings Report?
A month has gone by since the last earnings report for Jack In The Box Inc. (JACK - Free Report) . Shares have added about 2.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Jack in the Box Lags Q1 Earnings & Revenue Estimates
Jack in the Box reported lower-than-expected first-quarter fiscal 2017 results, wherein both earnings and revenues missed the Zacks Consensus Estimate.
Earnings and Revenue Discussion
Adjusted earnings of $1.18 per share lagged the Zacks Consensus Estimate of $1.24 by 4.8%. However, the bottom line surged nearly 27% year over year on reduced SG&A expenses.
Sales of $487.9 million missed the Zacks Consensus Estimate of $498.5 million by over 2%. However, the top line grew 3.6% on a year-over-year basis.
Behind the Headline Numbers
Comparable-store sales (comps) at the Jack in the Box company stores inched up 0.6%, compared with the gain of 0.5% in the prior-year quarter. Same store sales at franchised stores were up 3.9% higher than the gain of 1.8% in the year-ago quarter. System stores increased 3.1% as against a gain of 1.4% in the comparable period last year.
Comps at company-owned Qdoba restaurants were down 1.4% reflecting a 2.5% decrease in transactions, partially offset by growth in average check and catering sales. However, comps had increased 1.5% in the year-ago period. Comps at franchised restaurants saw 0.5% dip during the quarter compared with a gain of 2.1% reported a year ago. Also, system same-store sales were down 1.0% compared with a gain of 1.8% in the year-ago quarter.
The company’s consolidated restaurant operating margin was 18.6% of total sales, down 90 basis points (bps) year over year. Restaurant operating margin expanded 70 bps for the Jack in the Box company restaurants backed by favorable food and packaging costs. However, operating margin contracted 350 bps at the Qdoba restaurants. For Qdoba, costs associated with new restaurant openings, higher promotional activity, elevated labor expenses and sales deleverage resulted in the deterioration in operating margin.
SG&A expenses for the fiscal first quarter, as a percentage of revenues, were 11.4%. This was down 260 bps from the prior-year quarter. The decrease reflects the impact of the company's restructuring activities, a decline in pension and postretirement benefits and lower incentive compensation.
Fiscal Second-Quarter 2017 Comps Guidance
For the second quarter of fiscal 2017, the company expects same-store sales to remain flat to down 2% compared with the year-ago flat comps at the Jack in the Box restaurants.
For the Qdoba restaurants, same-store sales are projected to be down in the range of 1-3%, compared with the year-ago quarter comps growth of 3.1%.
Fiscal 2017 Guidance
Earnings per share, excluding restructuring charges and gains or losses from refranchising, are expected to be in the range of $4.25 to $4.45 in fiscal 2017. This is lower than the previous guidance of $4.55 to $4.75 per share. The Zacks Consensus Estimate of $4.73 per share is higher than the company’s expectation.
The company expects comps to grow approximately 2% at Jack in the Box system restaurants and to remain flat y/y at Qdoba company restaurants.
Consolidated restaurant operating margin is expected to be roughly in the band of 19.5% to 20% as compared with the previous expectation in the range of 20% to 21%.
The company also anticipates to open approximately 20 to 25 new Jack in the Box restaurants system-wide, the majority of which will be franchise locations. In addition, approximately 50 to 60 new Qdoba restaurants are expected to be opened, of which about 30 are likely to be company locations.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been seven downward revisions for the current quarter. In the past month, the consensus estimate also shifted downward by 14.7% due to these changes.
Jack In The Box Inc. Price and Consensus
Jack In The Box Inc. Price and Consensus | Jack In The Box Inc. Quote
VGM Scores
At this time, Jack In The Box's stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable solely for growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Notably, the stock has a Zacks Rank #4 (Sell). We are expecting an below average return from the stock in the next few months.