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Jack In The Box (JACK) Up 15% Since Last Earnings Report: Can It Continue?
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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 added about 15% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Jack In The Box due for a pullback? 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 drivers.
Jack in the Box Q1 Earnings Top Estimates, Rise Y/Y
Jack in the Box 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.
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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 6.29% due to these changes.
VGM Scores
At this time, Jack In The Box has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Jack In The Box has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Jack In The Box (JACK) Up 15% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Jack In The Box (JACK - Free Report) . Shares have added about 15% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Jack In The Box due for a pullback? 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 drivers.
Jack in the Box Q1 Earnings Top Estimates, Rise Y/Y
Jack in the Box 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.
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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 6.29% due to these changes.
VGM Scores
At this time, Jack In The Box has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Jack In The Box has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.