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Jack in the Box (JACK) Q1 Earnings Top Estimates, Rise Y/Y

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Jack in the Box Inc. (JACK - Free Report) reported solid first-quarter fiscal 2020 results, with earnings and revenues surpassing the Zacks Consensus Estimate as well as increasing on a year-over-year basis.

Let’s take a closer look at the numbers.

Earnings & Revenue Details

During the fiscal first quarter, adjusted earnings from continuing operations came in at $2.16 per share. The figure beat the Zacks Consensus Estimate of $1.75 by 23.4%. The metric also increased 84.6% from $1.17 reported in the prior-year quarter.

Quarterly revenues of $338.5 million surpassed the Zacks Consensus Estimate of $336 million by 0.7%. Moreover, the top line increased 10% on a year-over-year basis. Franchise rental revenues increased 8% year over year to $103.7 million. Franchise royalties and other revenues increased 13.7% year over year to $59.6 million owing to a rise in franchise same-store sales. Meanwhile, franchise contributions to advertising and other services revenues increased 13.2% year over year to $60.8 million.

 

Comps Discussion

Comps at Jack in the Box’s stores increased 7.5% in the fiscal first quarter compared with 2.9% growth in the prior-year quarter. The upside can be attributed to average check growth of 21.2%. However, transactions declined 13.7% in the quarter.

Same-store sales at franchised stores increased 13% compared with 1.6% growth in the prior-year quarter. Meanwhile, system-wide same-store sales increased 12.5% compared with 1.7% growth in the year-ago quarter.

Operating Highlights

Restaurant-level adjusted margin expanded 70 basis points (bps) in the fiscal first quarter from the year-ago quarter’s level to 25.5%. The uptick was backed by improvements in food and packaging costs. However, this was partially offset by rise in labor costs.

Food and packaging costs (as a percentage of company restaurant sales) declined 150 bps year over year, owing to menu price increases and positive mix shift. However, this was partially offset by higher ingredient costs. Commodity costs during the quarter increased 1.6% year over year owing to rise in oil and pork costs. Also, the company witnessed higher labor costs owing to wage inflation, higher incentive compensation as well as occupancy and other costs stemming from higher delivery fees.

Franchise level margin was 41.5% in the fiscal first quarter compared with 38.5% in the prior-year quarter.

During the quarter, selling, general and administrative expenses accounted for 6.1% of total revenues compared with 9.2% in the prior-year quarter.

Balance Sheet

As of Jan 17, 2021, cash (inclusive of restricted cash) totaled $288.6 million compared with $236.9 million as of Sep 27, 2020. Inventories during the quarter increased 10.8% year over year to $2 million. Long-term debt totaled $1,378.3 million as of Jan 17 compared with $1,376.9 million at the end of Sep 27, 2020.

Owing to the temporary suspension of the share repurchase program, the company did not repurchase any shares during the first quarter fiscal 2021.

As of Jan 17, 2021, the company had $200 million left under the share repurchase authorization, out of which $100 million will expire in November 2021 and the remaining $100 million will expire in November 2022.

On Feb 12, the company declared a cash dividend of 40 cents per share. The dividend will be paid out on Mar 16 to shareholders on record as of Mar 3, 2021.

Zacks Rank & Peer Releases

Jack in the Box currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Yum! Brands, Inc. (YUM - Free Report) reported strong fourth-quarter 2020 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Both the metrics increased year over year. The company’s adjusted earnings of $1.15 beat the Zacks Consensus Estimate of 99 cents. In the prior-year quarter, the company had reported adjusted earnings of $1.00. Quarterly revenues of $1,743 million surpassed the consensus mark of $1,731 million. The top line also increased 3% year over year. The upside can be attributed to increase in company sales.

McDonald's Corporation (MCD - Free Report) reported fourth-quarter 2020 results, with earnings and revenues missing the Zacks Consensus Estimate. The company reported adjusted earnings of $1.70 per share, which missed the Zacks Consensus Estimate of $1.75. Moreover, the bottom line declined 14% year over year. Quarterly revenues of $5,313.8 million missed the Zacks Consensus Estimate of $5,320 million. Moreover, the top line declined 2% year over year. The downtick was caused by the coronavirus pandemic.

Starbucks Corporation (SBUX - Free Report) reported first-quarter fiscal 2021 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The company reported adjusted EPS of 61 cents, which beat the Zacks Consensus Estimate of 55 cents. In the prior-year quarter, the company had reported adjusted EPS of 79 cents. Meanwhile, quarterly revenues of $6,749.4 million missed the Zacks Consensus Estimate of $6,873 million. Moreover, the top line fell 4.9% from the year-ago quarter’s levels. The downside was due to dismal global retail and comparable sales as well as decline in store traffic.

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