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Why Is Jack In The Box (JACK) Down 3.5% Since Last Earnings Report?

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A month has gone by since the last earnings report for Jack In The Box (JACK - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Jack In The Box due for a breakout? 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 drivers.

Jack in the Box Q1 Earnings & Revenues Beat Estimates

Jack in the Box reported solid first-quarter fiscal 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.

Earnings & Revenues Details

During the fiscal first quarter, adjusted earnings from continuing operations came in at $2.01 per share. The figure beat the Zacks Consensus Estimate of $1.76. The metric increased 2% from $1.97 reported in the prior-year quarter.

Quarterly revenues of $527.1 million beat the Zacks Consensus Estimate of $506 million by 4.1%. The top line rallied 52.9% on a year-over-year basis. Franchise rental revenues increased 5.6% year over year to $108.8 million. Franchise royalties and other revenues increased 25.7% year over year to $76.4 million. Franchise contributions to advertising and other services revenues rose 17.9% year over year to $71.7 million. Company restaurant sales during the quarter came in at $270.2 million compared with $120.1 million reported in the prior-year quarter.

Comps Discussion

In the quarter under review, comps at Jack in the Box’s stores increased 12.6% year over year against a decline of 0.3% reported in the prior-year quarter. The upside was primarily driven by growth in average checks and traffic.

Same-store sales at franchised stores increased 7.4% year over year compared with a 1.4% growth reported in the prior-year quarter. Systemwide same-store sales increased 7.8% year over year compared with a 1.2% increase reported in the year-ago quarter.

Del Taco Performance

During first-quarter fiscal 2023, same-store sales rose 3%, comprising franchise same-store sales growth of 2.8% and company-operated same-store sales growth of 3.1%. During the quarter, the company reported two franchise openings and one company-owned closure. It also announced development agreements for 16 new Del Taco restaurants (in California) and 10 new restaurants in North Tampa and Palm Beach, Florida.

Operating Highlights

During the fiscal first quarter, restaurant-level adjusted margin came in at 19.8% compared with 18.3% reported in the prior-year quarter. The upside was driven by strong sales leverage and a change in the mix of restaurants.

Food and packaging costs (as a percentage of company restaurant sales) in the fiscal first quarter came in at 32.8% compared with 31.3% reported in the prior year quarter.

The franchise level margin was 44.4% in the fiscal first quarter compared with 41.6% reported in the prior-year quarter.

During the quarter, selling, general and administrative expenses accounted for 9.5% of total revenues compared with 7.3% reported in the prior-year quarter.

Balance Sheet

As of Jan 22, 2023, cash totaled $153.8 million compared with $108.9 million as of Oct 2, 2022. Inventories during the quarter came in at $5.1 million compared with $5.3 million as of Oct 2, 2022. Long-term debt (net of current maturities) totaled $1,793.4 million as of Jan 22, 2023, compared with $1,799.5 million at the end of Oct 2, 2022.

During the fiscal first quarter, the company repurchased nearly 0.2 million shares for an aggregate cost of $15 million. As of Jan 22, 2023, the company stated the availability of $160 million under its repurchase program.

The company declared a cash dividend of 44 cents per share. The dividend will be paid out on Mar 28, 2023, to shareholders on record as of Mar 15, 2023.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

The consensus estimate has shifted 5.13% due to these changes.

VGM Scores

At this time, Jack In The Box has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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.

Performance of an Industry Player

Jack In The Box is part of the Zacks Retail - Restaurants industry. Over the past month, Red Robin (RRGB - Free Report) , a stock from the same industry, has gained 27.2%. The company reported its results for the quarter ended December 2022 more than a month ago.

Red Robin reported revenues of $290.09 million in the last reported quarter, representing a year-over-year change of +2.4%. EPS of -$1.35 for the same period compares with -$1.03 a year ago.

Red Robin is expected to post a loss of $0.62 per share for the current quarter, representing a year-over-year change of -416.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -439.1%.

Red Robin has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.


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