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Jack in the Box (JACK) Q2 Earnings: What's in the Cards?

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Jack in the Box Inc. (JACK - Free Report) is scheduled to report second-quarter fiscal 2018 results on May 16, after market close. In the first-quarter 2018, the company’s earnings surpassed the Zacks Consensus Estimate by 16%.

Q2 Expectations

The question lingering in investors’ minds now is whether Jack in the Box will be able to deliver a positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for second-quarter earnings is pegged at 86 cents, lower than 98 cents in the year-ago quarter. Of late, the company’s earnings estimates have been stable. In the first quarter of 2018, it witnessed earnings growth of 15% on a year-over-year basis.    

Meanwhile, analysts polled by Zacks expect revenues of nearly $212.2 million, down 42.6% from the prior-year quarter.

Let’s delve deeper to find out how the company’s top and bottom line will shape up this earnings season.

Factors at Play

Lower traffic and soft demand is likely to impact Jack in the Box sales in the second quarter. Further, decline in comps might dent the company’s sales. Earlier, Jack in the Box had stated that it expects comps in the range of -1% to 1% at the company’s system restaurants compared with a 0.8% decline in the year-ago quarter.

In addition to the dented profit margins from sales deleverage, Jack in the Box is also bearing the brunt of high costs. In fact, high capital expenditures and expenses related to new restaurant openings have been added concerns for the company. Moreover, increase in food and packaging costs, impact of wage inflation and rising commodity prices might impact the company’s margin.

However, the company seems to be making regular menu innovations and also providing limited period offers (LPO) at both its flagship restaurants to drive long-term customer loyalty. Furthermore, Jack in the Box plans to continue focusing on effective cost management and improving guest experience by striving toward operational excellence.

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

What Does the Zacks Model Unveil?

Our proven model shows that Jack in the Box is likely to beat earnings estimates this quarter. This is because the stock has the right combination of two ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  
 
Jack in the Box has an Earnings ESP of +2.77% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Peer Releases

Darden (DRI - Free Report) reported mixed third-quarter fiscal 2018 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same. Adjusted earnings of $1.71 per share increased 29.5% year over year on the back of higher revenues.

Restaurant Brands’ (QSR - Free Report) first-quarter 2018 earnings and revenues outpaced the Zacks Consensus Estimate. Earnings under the previous accounting standard came in at 67 cents, improving 86.1% year over year.

Chipotle’s (CMG - Free Report) first-quarter 2018 earnings surpassed analysts’ expectations while revenues were in line with the same. Adjusted earnings of $2.13 per share surged 33.1% from the year-ago quarter, courtesy of higher revenues and lower food costs.

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