We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why is Jack in the Box (JACK) Down 7% Since its Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for Jack in the Box Inc. (JACK - Free Report) . Shares have lost about 7% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is JACK due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Jack in the Box Misses Q2 Earnings & Sales Estimates
Jack in the Box reported lower-than-expected results in second-quarter fiscal 2018. On Mar 21, 2018, the company accomplished the sell-out of its subsidiary — Qdoba Restaurant Corporation — to private equity firm Apollo Global Management, LLC.
Adjusted earnings from continuing operations came in at 80 cents per share, which missed the Zacks Consensus Estimate of 86 cents. The bottom-line figure also decreased nearly 7% year over year. Total sales of $209.8 million lagged the consensus mark of $213 million and decreased 21.1% on a year-over-year basis.
Jack in the Box Comps Discussion
Comps at Jack in the Box’s stores inched up 0.9% compared to the prior-year quarter’s decline of 2.4%. In the first-quarter fiscal 2018, the company had reported comps growth of 0.2% driven by average check growth of 2.6%, partially offset by a 1.7% decline in transactions.
Same-store sales at franchised stores slipped 0.2% compared with a decline of 0.4% in the year-ago quarter and 0.3% in the previous quarter. System-wide same-store sales dipped 0.1%, narrower than the decline of 0.8% in the prior-year quarter and 0.2% in the first-quarter fiscal 2018.
Operating Highlights
The company’s consolidated restaurant operating margin was 22.7%, up 300 basis points (bps) year over year.
Restaurant-level EBITDA increased 250 bps from the year-ago quarter to 26.4%. The upside was owing to benefits from refranchising, partially offset by commodity inflation as well as higher repairs and maintenance costs.
In the fiscal second quarter, franchise operating margin was 51.5%, down 160 bps year over year. Franchise EBITDA was 59.8%, reflecting a year-over-year decline of 140 bps. The downside can be attributed to a decrease in franchise-operated restaurant comps and rise in costs in the current quarter.
Balance Sheet
As of Apr 15, 2018, cash totaled $1.2 million compared with $4.5 million as of Oct 1, 2017 (end of fourth-quarter and fiscal 2017). Inventories in the second quarter amounted to $2.6 million, down from $3.4 million at the end of fiscal 2017.
Long-term debt was $900.4 million as of Apr 15, 2018 compared with $1,080 million at the end of fiscal 2017. Cash flows from operating activities declined to $29.3 million in the second quarter compared with $11.5 million at the prior-year quarter end.
Additionally, Jack in the Box resumed share buyback program in the second quarter and repurchased $100 million of stocks. The company also authorized $200 million of share repurchase program.
Third-Quarter Fiscal 2018 Guidance
For the fiscal third quarter, comps are expected in the range of flat to up 1% at Jack in the Box system restaurants compared with a 0.2% decline in the year-ago quarter.
Fiscal 2018 Outlook
Comps at Jack in the Box system restaurants are envisioned to be in the range of flat to up 1% compared with the prior projection of 1-2% increase. Meanwhile, the company continues to expect Restaurant-Level EBITDA within the 26-27% band.
For fiscal 2018, adjusted EBITDA is anticipated between approximately $260 million and $270 million. Capital expenditures are estimated roughly in the range of $30-$35 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been three revisions higher for the current quarter compared to three lower.
At this time, JACK has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
JACK has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why is Jack in the Box (JACK) Down 7% Since its Last Earnings Report?
A month has gone by since the last earnings report for Jack in the Box Inc. (JACK - Free Report) . Shares have lost about 7% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is JACK due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Jack in the Box Misses Q2 Earnings & Sales Estimates
Jack in the Box reported lower-than-expected results in second-quarter fiscal 2018. On Mar 21, 2018, the company accomplished the sell-out of its subsidiary — Qdoba Restaurant Corporation — to private equity firm Apollo Global Management, LLC.
Adjusted earnings from continuing operations came in at 80 cents per share, which missed the Zacks Consensus Estimate of 86 cents. The bottom-line figure also decreased nearly 7% year over year. Total sales of $209.8 million lagged the consensus mark of $213 million and decreased 21.1% on a year-over-year basis.
Jack in the Box Comps Discussion
Comps at Jack in the Box’s stores inched up 0.9% compared to the prior-year quarter’s decline of 2.4%. In the first-quarter fiscal 2018, the company had reported comps growth of 0.2% driven by average check growth of 2.6%, partially offset by a 1.7% decline in transactions.
Same-store sales at franchised stores slipped 0.2% compared with a decline of 0.4% in the year-ago quarter and 0.3% in the previous quarter. System-wide same-store sales dipped 0.1%, narrower than the decline of 0.8% in the prior-year quarter and 0.2% in the first-quarter fiscal 2018.
Operating Highlights
The company’s consolidated restaurant operating margin was 22.7%, up 300 basis points (bps) year over year.
Restaurant-level EBITDA increased 250 bps from the year-ago quarter to 26.4%. The upside was owing to benefits from refranchising, partially offset by commodity inflation as well as higher repairs and maintenance costs.
In the fiscal second quarter, franchise operating margin was 51.5%, down 160 bps year over year. Franchise EBITDA was 59.8%, reflecting a year-over-year decline of 140 bps. The downside can be attributed to a decrease in franchise-operated restaurant comps and rise in costs in the current quarter.
Balance Sheet
As of Apr 15, 2018, cash totaled $1.2 million compared with $4.5 million as of Oct 1, 2017 (end of fourth-quarter and fiscal 2017). Inventories in the second quarter amounted to $2.6 million, down from $3.4 million at the end of fiscal 2017.
Long-term debt was $900.4 million as of Apr 15, 2018 compared with $1,080 million at the end of fiscal 2017. Cash flows from operating activities declined to $29.3 million in the second quarter compared with $11.5 million at the prior-year quarter end.
Additionally, Jack in the Box resumed share buyback program in the second quarter and repurchased $100 million of stocks. The company also authorized $200 million of share repurchase program.
Third-Quarter Fiscal 2018 Guidance
For the fiscal third quarter, comps are expected in the range of flat to up 1% at Jack in the Box system restaurants compared with a 0.2% decline in the year-ago quarter.
Fiscal 2018 Outlook
Comps at Jack in the Box system restaurants are envisioned to be in the range of flat to up 1% compared with the prior projection of 1-2% increase. Meanwhile, the company continues to expect Restaurant-Level EBITDA within the 26-27% band.
For fiscal 2018, adjusted EBITDA is anticipated between approximately $260 million and $270 million. Capital expenditures are estimated roughly in the range of $30-$35 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been three revisions higher for the current quarter compared to three lower.
Jack In The Box Inc. Price and Consensus
Jack In The Box Inc. Price and Consensus | Jack In The Box Inc. Quote
VGM Scores
At this time, JACK has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
JACK has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.