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Jack in the Box (JACK) Q2 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. While the bottom line beat the consensus estimate for the fourth straight quarter, the top line surpassed the same for the sixth consecutive time.

Let’s take a closer look at the numbers.

Earnings & Revenue Details

During the fiscal second quarter, adjusted earnings from continuing operations came in at $1.48 per share. The figure beat the Zacks Consensus Estimate of $1.25 by 18.4%. The metric also surged 196% from 50 cents reported in the prior-year quarter.

Quarterly revenues of $257.2 million surpassed the Zacks Consensus Estimate of $249 million by 3.2%. Moreover, the top line increased 19% on a year-over-year basis. Franchise rental revenues increased 11.5% year over year to $77.9 million. Franchise royalties and other revenues rallied 25.1% year over year to $47.2 million owing to rise in franchise same-store sales. Meanwhile, franchise contributions to advertising and other services revenues increased 35.1% year over year to $46.1 million.

Jack In The Box Inc. Price, Consensus and EPS Surprise

 

Jack In The Box Inc. Price, Consensus and EPS Surprise

Jack In The Box Inc. price-consensus-eps-surprise-chart | Jack In The Box Inc. Quote

 

Comps Discussion

Comps at Jack in the Box’s stores increased 14.5% in the fiscal second quarter against 4.1% decline reported in the prior-year quarter. The upside can be attributed to average check growth of 19.9%. However, transactions declined 5.4% in the quarter.

Same-store sales at franchised stores increased 21.3% year over year against 4.2% decline reported in the prior-year quarter. Meanwhile, system-wide same-store sales increased 20.6% year over year against 4.2% decline reported in the year-ago quarter.

Operating Highlights

During the fiscal second quarter, restaurant-level adjusted margin expanded 530 basis points (bps) year over year to 25.9%. 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 210 bps year over year, owing to menu price increases and positive mix shift. However, this was partially negated by higher ingredient costs. Commodity costs during the quarter increased 1.7% year over year. The increase was due to a rise in oil and pork costs, partially offset by fall in beef prices. Also, the company witnessed higher labor costs owing to wage inflation (of 6.3%), higher incentive compensation as well as other costs stemming from higher delivery fees.

Franchise level margin was 42% in the fiscal second quarter compared with 38.6% in the prior-year quarter.

During the quarter, selling, general and administrative expenses accounted for 7.3% of total revenues compared with 11.2% in the prior-year quarter.

Balance Sheet

As of Apr 11, 2021, cash (inclusive of restricted cash) totaled $108.8 million compared with $236.9 million as of Sep 27, 2020. Inventories during the quarter came in at $2.2 million compared with $1.8 million as on Sep 27, 2020. Long-term debt (net of current maturities) totaled $1,271.4 million as of Apr 11 compared with $1,376.9 million at the end of Sep 27, 2020.

During the fiscal second quarter, the company repurchased 0.6 million shares of its common stock for $65 million. As of Apr 11, 2021, the company had $135 million left under the share repurchase authorization, out of which $35 million will expire in November 2021 and the remaining $100 million will expire in November 2022.

On May 7, 2021, the company declared a cash dividend of 44 cents per share. Notably, the company raised its quarterly dividend by 10% from 40 cents declared in the previous quarter. The hiked dividend will be paid out on Jun 11, 2021 to shareholders on record as of May 26, 2021. 

Fiscal 2021 Outlook

For fiscal 2021, the company expects system same-store sales growth in high single-digit. General and administrative expenses (as a percentage of system-wide sales) is estimated at approximately 1.7% for fiscal 2021.

For fiscal 2021, labor cost inflation is estimated in the range of 5-6%, while commodity cost inflation is expected at approximately 3%.

Adjusted EBITDA for fiscal 2021 is anticipated between $320 million and $330 million. Notably, the figure incorporates approximately $6 - $7 million owing to benefits from the 53rd week.

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 first-quarter 2021 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The metrics increased year over year. The company’s adjusted earnings of $1.07 beat the Zacks Consensus Estimate of 85 cents. In the prior-year quarter, the company had reported adjusted earnings of 64 cents. Quarterly revenues of $1,486 million surpassed the consensus estimate of $1,461 million. The top line also increased 17.7% year over year. The upside can be attributed to increase in sales along with rise in franchise and property revenues.

McDonald's Corporation (MCD - Free Report) reported first-quarter 2021 results, with earnings and revenues outpacing the Zacks Consensus Estimate. The company reported adjusted earnings of $1.92 per share, which surpassed the Zacks Consensus Estimate of $1.81. Moreover, the bottom line rose 31% year over year. Quarterly revenues of $5,124.6 million beat the Zacks Consensus Estimate of $5,047 million. Moreover, the figure rose 9% year over year. The top line benefited from increase in global comparable sales.

Starbucks Corporation (SBUX - Free Report) reported second-quarter fiscal 2021 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The company reported adjusted EPS of 62 cents, which beat the Zacks Consensus Estimate of 52 cents. In the prior-year quarter, the company had reported adjusted EPS of 32 cents. Meanwhile, quarterly revenues of $6,668 million missed the Zacks Consensus Estimate of $6,803 million. However, the top line increased 11.2% from the year-ago quarter’s levels. The uptick was driven by growth in comparable store sales, partially offset by unfavorable impact of Global Coffee Alliance transition-related activities.

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