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Jack in the Box (JACK) Q3 Earnings & Revenues Beat Estimates
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Jack in the Box Inc. (JACK - Free Report) reported solid third-quarter fiscal 2021 results, wherein both earnings and revenues not only surpassed the Zacks Consensus Estimate but also improved on a year-over-year basis. While the bottom line beat the consensus mark for the fifth straight quarter, the top line surpassed the same for the seventh consecutive time.
Earnings & Revenues
During the fiscal third quarter, adjusted earnings from continuing operations was $1.79 per share. The reported figure beat the Zacks Consensus Estimate of $1.46. The metric improved 26.1% from the prior-year quarter’s $1.42.
Quarterly revenues of $269.5 million surpassed the Zacks Consensus Estimate of $258 million. The top line increased 11.2% on a year-over-year basis. Franchise rental revenues climbed 6% year over year to $80.6 million. Franchise royalties and other revenues rose 12.4% year over year to $48.6 million owing to rise in franchise same-store sales. Franchise contributions to advertising and other services revenues surged 19.3% year over year to $48.4 million. Company restaurant sales increased to $91.9 million from $82.4 million.
Jack In The Box Inc. Price, Consensus and EPS Surprise
Comps at Jack in the Box’s stores increased 9% in the fiscal third quarter compared with 4.1% in the prior-year quarter. The upside can be attributed to average check and transactions growth.
Same-store sales at franchised stores increased 10.3% year over year compared with 6.9% growth reported in the prior-year quarter. System-wide same-store sales were up 10.2% year over year compared with the year-ago quarter’s gain of 6.6%.
Operating Highlights
During the fiscal third quarter, restaurant-level adjusted margin came in at 25.4%, flat year over year. Sales leverage was offset by rise in food and packaging costs, wage inflation of 8%, higher incentive compensation, and increase in delivery fees and maintenance and repair costs.
Food and packaging costs (as a percentage of company restaurant sales) rose 20 bps to 29.4% year over year, due to increase in costs for ingredients, partially mitigated by favorable sales mix and menu price increases. Commodity costs in the quarter increased 5.7% year over year. The increase was due to a rise in pork and beverages costs, partially offset by fall in beef prices.
Franchise level margin was 43.3% in the fiscal second quarter compared with 41.5% in the prior-year quarter.
During the quarter, selling, general and administrative expenses accounted for 8.1% of total revenues compared with 5.6% in the prior-year quarter.
Balance Sheet
As of Jul 4, 2021, cash (inclusive of restricted cash) totaled $102.4 million compared with $196.9 million as of Jul 5, 2020. Inventories during the quarter were $2.1 million compared with $1.8 million as on Sep 27, 2020. Long-term debt (net of current maturities) totaled $1,272.4 million as of Jul 4 compared with $1,376.9 million at the end of Sep 27, 2020.
During the fiscal third quarter, the company repurchased 0.6 million shares of its common stock for $65 million. As of Jul 4, 2021, the company had $70 million left under the share repurchase authorization, which will expire in November 2022.
The company declared a cash dividend of 44 cents per share. The dividend will be paid out on Sep 3, 2021 to shareholders on record as of Aug 18, 2021.
Fiscal 2021 Outlook
General and administrative expenses are anticipated to be $71-76 million in 2021. For fiscal 2021, labor cost inflation is estimated in the range of 7-8%, up from the prior estimate of 5-6%.
Zacks Rank & Key Picks
Jack in the Box currently carries a Zacks Rank #3 (Hold).
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Jack in the Box (JACK) Q3 Earnings & Revenues Beat Estimates
Jack in the Box Inc. (JACK - Free Report) reported solid third-quarter fiscal 2021 results, wherein both earnings and revenues not only surpassed the Zacks Consensus Estimate but also improved on a year-over-year basis. While the bottom line beat the consensus mark for the fifth straight quarter, the top line surpassed the same for the seventh consecutive time.
Earnings & Revenues
During the fiscal third quarter, adjusted earnings from continuing operations was $1.79 per share. The reported figure beat the Zacks Consensus Estimate of $1.46. The metric improved 26.1% from the prior-year quarter’s $1.42.
Quarterly revenues of $269.5 million surpassed the Zacks Consensus Estimate of $258 million. The top line increased 11.2% on a year-over-year basis. Franchise rental revenues climbed 6% year over year to $80.6 million. Franchise royalties and other revenues rose 12.4% year over year to $48.6 million owing to rise in franchise same-store sales. Franchise contributions to advertising and other services revenues surged 19.3% year over year to $48.4 million. Company restaurant sales increased to $91.9 million from $82.4 million.
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 9% in the fiscal third quarter compared with 4.1% in the prior-year quarter. The upside can be attributed to average check and transactions growth.
Same-store sales at franchised stores increased 10.3% year over year compared with 6.9% growth reported in the prior-year quarter. System-wide same-store sales were up 10.2% year over year compared with the year-ago quarter’s gain of 6.6%.
Operating Highlights
During the fiscal third quarter, restaurant-level adjusted margin came in at 25.4%, flat year over year. Sales leverage was offset by rise in food and packaging costs, wage inflation of 8%, higher incentive compensation, and increase in delivery fees and maintenance and repair costs.
Food and packaging costs (as a percentage of company restaurant sales) rose 20 bps to 29.4% year over year, due to increase in costs for ingredients, partially mitigated by favorable sales mix and menu price increases. Commodity costs in the quarter increased 5.7% year over year. The increase was due to a rise in pork and beverages costs, partially offset by fall in beef prices.
Franchise level margin was 43.3% in the fiscal second quarter compared with 41.5% in the prior-year quarter.
During the quarter, selling, general and administrative expenses accounted for 8.1% of total revenues compared with 5.6% in the prior-year quarter.
Balance Sheet
As of Jul 4, 2021, cash (inclusive of restricted cash) totaled $102.4 million compared with $196.9 million as of Jul 5, 2020. Inventories during the quarter were $2.1 million compared with $1.8 million as on Sep 27, 2020. Long-term debt (net of current maturities) totaled $1,272.4 million as of Jul 4 compared with $1,376.9 million at the end of Sep 27, 2020.
During the fiscal third quarter, the company repurchased 0.6 million shares of its common stock for $65 million. As of Jul 4, 2021, the company had $70 million left under the share repurchase authorization, which will expire in November 2022.
The company declared a cash dividend of 44 cents per share. The dividend will be paid out on Sep 3, 2021 to shareholders on record as of Aug 18, 2021.
Fiscal 2021 Outlook
General and administrative expenses are anticipated to be $71-76 million in 2021. For fiscal 2021, labor cost inflation is estimated in the range of 7-8%, up from the prior estimate of 5-6%.
Zacks Rank & Key Picks
Jack in the Box currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks the same space include Papa John's International, Inc. (PZZA - Free Report) , Yum! Brands, Inc. (YUM - Free Report) and The Wendy's Company (WEN - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Papa John's International’s earnings in 2021 are anticipated to witness growth of 104.3%.
Yum! Brands reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 23%.
Wendy's has an impressive long-term earnings growth rate of 9%.