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Jack in the Box (JACK) Q2 Earnings Beat Estimates, Rise Y/Y
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Jack in the Box Inc. (JACK - Free Report) reported solid second-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.
Darin Harris, Jack in the Box’s chief executive officer, stated, "The momentum in our business continued throughout the second quarter, reflected in outstanding sales, positive net unit growth, improved margin performance and the signing of a development agreement for expansion into Mexico. Over the last year we have been focused on the execution of our strategy, and the results are beginning to show.”
Earnings & Revenues Details
During the fiscal second quarter, adjusted earnings from continuing operations came in at $1.47 per share. The figure beat the Zacks Consensus Estimate of $1.20. The metric increased 26.7% from $1.16 reported in the prior-year quarter.
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Quarterly revenues of $395.7 million beat the Zacks Consensus Estimate of $383 million by 3.4%. The top line rallied 22.8% on a year-over-year basis.
Franchise rental revenues increased 9.1% year over year to $83.5 million. This figure compares to our projection of $98.1 million.
Franchise royalties and other revenues increased 14.6% year over year to $54 million. This figure compares to our projection of $53.2 million.
Franchise contributions to advertising and other services revenues rose 17.6% year over year to $55.6 million. This figure compares to our projection of $46.9 million.
Company restaurant sales during the quarter came in at $202.6 million (compared with $151.3 million reported in the prior-year quarter). This figure compares to our projection of $175.9 million.
Comps Discussion
In the quarter under review, comps at Jack in the Box’s stores increased 10.8% year over year compared with a 1.7% growth 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 9.4% year over year against a decline of 1.1% reported in the prior-year quarter. Systemwide same-store sales increased 9.5% year over year against a decline of 0.8% reported in the year-ago quarter.
Del Taco Performance
During second-quarter fiscal 2023, same-store sales rose 3.2%, comprising franchise same-store sales growth of 2.8% and company-operated same-store sales growth of 3.5%. During the quarter, the company reported three franchise openings. It also announced development agreements for 10 new Del Taco restaurants (in Las Vegas, Wyoming and Montana) and six Jack in the Box restaurants in Wyoming and Montana.
Operating Highlights
During the fiscal second quarter, restaurant-level adjusted margin came in at 21.4% compared with 15% in the prior-year quarter. The upside was driven by strong sales leverage and solid sales in Oklahoma and Kansas City.
Food and packaging costs (as a percentage of company restaurant sales) fell 170 basis points (bps) year over year to 29.3%.
The franchise level margin was 41.2% in the fiscal second quarter compared with 39.4% reported in the prior-year quarter. During the quarter, Franchise level margin matched our projections.
During the quarter, selling, general and administrative expenses accounted for 10% of total revenues (compared with 8.8% in the prior-year quarter). This compares to our projection of 10.7%.
Balance Sheet
As of Apr 16, 2023, cash totaled $94.9 million compared with $153.8 million as of Jan 22, 2023. Inventories during the quarter came in at $5.3 million compared with $5.1 million as of Jan 22, 2023. Long-term debt (net of current maturities) totaled $1,737 million as of Apr 16, 2023, compared with $1,793.4 million at the end of Jan 22, 2023.
During the fiscal second quarter, the company repurchased nearly 0.2 million shares for an aggregate cost of $18.6 million. As of May 17, 2023, the company stated the availability of $141.6 million under its repurchase program.
The company declared a cash dividend of 44 cents per share. The dividend will be paid out on Jun 13, 2023, to shareholders on record as of May 31, 2023.
Zacks Rank & Key Picks
Jack in the Box currently has a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Chipotle’s 2024 sales and EPS suggests growth of 12.4% and 19.7%, respectively, from the year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth rate of 7.8%. The stock has gained 19.5% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2023 sales suggests growth of 13.4% from the year-ago period’s levels.
Chuy’s Holdings carries a Zacks Rank #2. CHUY has a trailing four-quarter earnings surprise of 23.4%, on average. Shares of CHUY have increased 82% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings 2023 sales and EPS suggests growth of 10.1% and 23.4%, respectively, from the year-ago period’s levels.
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Jack in the Box (JACK) Q2 Earnings Beat Estimates, Rise Y/Y
Jack in the Box Inc. (JACK - Free Report) reported solid second-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.
Darin Harris, Jack in the Box’s chief executive officer, stated, "The momentum in our business continued throughout the second quarter, reflected in outstanding sales, positive net unit growth, improved margin performance and the signing of a development agreement for expansion into Mexico. Over the last year we have been focused on the execution of our strategy, and the results are beginning to show.”
Earnings & Revenues Details
During the fiscal second quarter, adjusted earnings from continuing operations came in at $1.47 per share. The figure beat the Zacks Consensus Estimate of $1.20. The metric increased 26.7% from $1.16 reported in the prior-year quarter.
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Quarterly revenues of $395.7 million beat the Zacks Consensus Estimate of $383 million by 3.4%. The top line rallied 22.8% on a year-over-year basis.
Franchise rental revenues increased 9.1% year over year to $83.5 million. This figure compares to our projection of $98.1 million.
Franchise royalties and other revenues increased 14.6% year over year to $54 million. This figure compares to our projection of $53.2 million.
Franchise contributions to advertising and other services revenues rose 17.6% year over year to $55.6 million. This figure compares to our projection of $46.9 million.
Company restaurant sales during the quarter came in at $202.6 million (compared with $151.3 million reported in the prior-year quarter). This figure compares to our projection of $175.9 million.
Comps Discussion
In the quarter under review, comps at Jack in the Box’s stores increased 10.8% year over year compared with a 1.7% growth 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 9.4% year over year against a decline of 1.1% reported in the prior-year quarter. Systemwide same-store sales increased 9.5% year over year against a decline of 0.8% reported in the year-ago quarter.
Del Taco Performance
During second-quarter fiscal 2023, same-store sales rose 3.2%, comprising franchise same-store sales growth of 2.8% and company-operated same-store sales growth of 3.5%. During the quarter, the company reported three franchise openings. It also announced development agreements for 10 new Del Taco restaurants (in Las Vegas, Wyoming and Montana) and six Jack in the Box restaurants in Wyoming and Montana.
Operating Highlights
During the fiscal second quarter, restaurant-level adjusted margin came in at 21.4% compared with 15% in the prior-year quarter. The upside was driven by strong sales leverage and solid sales in Oklahoma and Kansas City.
Food and packaging costs (as a percentage of company restaurant sales) fell 170 basis points (bps) year over year to 29.3%.
The franchise level margin was 41.2% in the fiscal second quarter compared with 39.4% reported in the prior-year quarter. During the quarter, Franchise level margin matched our projections.
During the quarter, selling, general and administrative expenses accounted for 10% of total revenues (compared with 8.8% in the prior-year quarter). This compares to our projection of 10.7%.
Balance Sheet
As of Apr 16, 2023, cash totaled $94.9 million compared with $153.8 million as of Jan 22, 2023. Inventories during the quarter came in at $5.3 million compared with $5.1 million as of Jan 22, 2023. Long-term debt (net of current maturities) totaled $1,737 million as of Apr 16, 2023, compared with $1,793.4 million at the end of Jan 22, 2023.
During the fiscal second quarter, the company repurchased nearly 0.2 million shares for an aggregate cost of $18.6 million. As of May 17, 2023, the company stated the availability of $141.6 million under its repurchase program.
The company declared a cash dividend of 44 cents per share. The dividend will be paid out on Jun 13, 2023, to shareholders on record as of May 31, 2023.
Zacks Rank & Key Picks
Jack in the Box currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail-Wholesale sector are Chipotle Mexican Grill, Inc. (CMG - Free Report) , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Chuy's Holdings, Inc. (CHUY - Free Report) .
Chipotle carries a Zacks Rank #1 (Strong Buy). CMG has a long-term earnings growth rate of 31.8%. The stock has improved 62% in the past year. You can see the complete list of today’s Zacks Rank #1 stocks here.
The Zacks Consensus Estimate for Chipotle’s 2024 sales and EPS suggests growth of 12.4% and 19.7%, respectively, from the year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth rate of 7.8%. The stock has gained 19.5% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2023 sales suggests growth of 13.4% from the year-ago period’s levels.
Chuy’s Holdings carries a Zacks Rank #2. CHUY has a trailing four-quarter earnings surprise of 23.4%, on average. Shares of CHUY have increased 82% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings 2023 sales and EPS suggests growth of 10.1% and 23.4%, respectively, from the year-ago period’s levels.