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Jack in the Box (JACK) Q3 Earnings & Revenues Top Estimates

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Jack in the Box Inc. (JACK - Free Report) reported third-quarter fiscal 2019 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Notably, this marked the company's third straight earnings beat. Following the quarterly results, shares of the company witnessed a sharp gain of 9% in after-hours trading on Aug 7. However, the stock has lost 4.2% against the industry’s 28.2% growth year to date.

Adjusted earnings from continuing operations came in at $1.07 per share, which exceeded the Zacks Consensus Estimate of 99 cents and increased 7% on a year-over-year basis. Total revenues of $222.4 million marginally beat the consensus mark of $219 million and improved 18.3% year over year.

Comps Discussion

Comps at Jack in the Box’s stores rose 2.8% compared with the prior-year quarter’s 0.6% growth. This uptick can be attributed to average check growth. Transactions improved to flat in the quarter. In second-quarter fiscal 2019, the company had reported comps growth of 0.6%.

Same-store sales at franchised stores increased 2.7% compared with a 0.5% gain in the prior-year quarter. In the last reported quarter, the metric inched up 0.1%. Meanwhile, system-wide same-store sales improved 2.7% compared with a 0.5% increase in the year-ago quarter. In second-quarter fiscal 2019, system-wide same-store sales rose 0.2%.

Operating Highlights

Restaurant-level adjusted margin contracted 50 bps in the third quarter from the year-ago quarter to 27%. The downside was primarily due to wage and commodity inflation, which benefits from refranchising and decline in maintenance as well as repair expenses. Also, food and packaging costs increased 90 basis points owing to higher ingredient costs. Franchise level margin was 42.6% compared with 60.2% in the prior-year quarter.

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

Balance Sheet

As of Jul 7, 2019, cash totaled $12.4 million compared with $2.7 million as of Sep 30, 2018. Inventories in the quarter under review amounted to $1.9 million. Long-term debt summed $971.8 million as of Jul 7, 2019, compared with $1,037.9 million at the end of Sep 30, 2018. Cash flows from operating activities increased to $116.8 million in the third quarter from $59.4 million at the prior-year quarter end.

Jack in the Box did not repurchase any shares in the third quarter. Currently, it has $101 million left under the current authorization. Moreover, on Aug 2, 2019, the company announced an additional $200 million share repurchase program, which will expire in November 2020.

2019 Outlook

For fiscal 2019, comps at Jack in the Box’s system restaurants are envisioned to increase at least 1% compared with the prior guided range of flat to up 1%. Meanwhile, the company continues to expect Restaurant-Level EBITDA within the 26-27% band.

Adjusted EBITDA is anticipated between approximately $260 million and $270 million. Capital expenditures are estimated roughly in the $30-$35 million range.

Zacks Rank & Peer Releases

Jack in the Box carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Darden (DRI - Free Report) reported fourth-quarter fiscal 2019 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same. Adjusted earnings of $1.76 per share beat the Zacks Consensus Estimate of $1.73. The bottom line also increased 26.6% year over year on higher revenues.

Domino’s (DPZ - Free Report) reported mixed second-quarter 2019 financial numbers, wherein earnings exceeded the Zacks Consensus Estimate but revenues missed the same. Adjusted earnings of $2.19 per share outpaced the Zacks Consensus Estimate of $2.00. The metric also increased 19% on a year-over-year basis. The bottom-line improvement was driven by higher net income and lower diluted share count as a result of share repurchases.

Chipotle (CMG - Free Report) reported better-than-expected results in the second quarter of 2019. Its adjusted earnings of $3.99 per share surpassed the Zacks Consensus Estimate of $3.69 by 8.1%. The bottom line also grew 39% from the year-ago quarter figure backed by solid revenues and strong operating margins.

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