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Will Jack in the Box (JACK) Q4 Earnings Spring a Surprise?

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Jack in the Box Inc. (JACK - Free Report) is scheduled to report fourth-quarter fiscal 2016 numbers on Nov 21, after market close.

Last quarter, Jack in the Box posted a positive earnings surprise of 22.99%. In fact, the company surpassed earnings estimates in two of the past four quarters, with an average beat of 7.52%.

Let’s see how things are shaping up for this announcement.

JACK IN THE BOX Price and EPS Surprise


JACK IN THE BOX Price and EPS Surprise | JACK IN THE BOX Quote

Factors Likely to Influence this Quarter

Jack in the Box’s same-store sales have been consistently outperforming the industry over the past several quarters. Particularly, the company’s Qdoba brand has been witnessing comps growth on the back of menu innovation. We expect the trend to continue in the fiscal fourth quarter.

Meanwhile, increased marketing and remodeling efforts along with investments in technology-driven initiatives should drive top-line growth. Moreover, the company is currently focusing deeply on catering sales. This is expected to boost its sales in the to-be-reported quarter.

However, a soft consumer spending environment in the U.S. restaurant space might hurt traffic and comps in the to-be-reported quarter.

In fact, for fourth-quarter fiscal 2016, the company expects comps growth at the Jack in the Box restaurants in the range of 1–2% compared with the year-ago comps growth of 4.1%. For the Qdoba restaurants, comps are projected to grow in the range of 1–2% compared with 6.1% comps growth in the year-ago quarter.

Earnings Whispers

Our proven model does not conclusively show that Jack in the Box is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Jack in the Box has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 88 cents.

Zacks Rank: Jack in the Box has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Burlington Stores, Inc. (BURL - Free Report) has an Earnings ESP of +6.06% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pier 1 Imports, Inc. (PIR - Free Report) has an Earnings ESP of +8.33% and a Zacks Rank #3.

Restoration Hardware Holdings, Inc. (RH - Free Report) has an Earnings ESP of +6.25% and a Zacks Rank #3.

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