Jack in the Box Inc.
) recently posted fourth-quarter 2012 adjusted earnings of 27
cents per share. The result missed the Zacks Consensus Estimate
of 36 cents but was ahead of the year-ago quarter earnings of 20
cents. However, on a GAAP basis, including gains from
refranchising and restructuring charges, earnings per share came
in at 39 cents compared with 50 cents in the year-ago period.
For full-fiscal 2012, adjusted earnings per share were $1.20
versus 85 cents in the prior year while on a GAAP basis earnings
were $1.40 per share compared with $1.63 in the year-ago period.
Behind the Headlines Number
During the quarter, total revenue dipped 2.5% year over year to
$357.6 million. The decline in revenue was attributable to a 5.8%
dip in restaurant sales to $278.9 million. Total revenue also
fell short of the Zacks Consensus Estimate of $467.0 million.
However, franchised restaurant revenue increased 11.0% year over
year to $78.7 million. For full-fiscal 2012, total revenue
declined 7.1% to $1,545.0 million.
Jack in the Box's comparable store sales (comps) increased 3.1%,
driven by a 3.1% upside at company-owned restaurants and a 3.0%
rise at franchised restaurants. In the year-earlier quarter,
system-wide comps grew by the same magnitude.
However, same-store sales at Qdoba's restaurant slackened to 0.4%
from 3.7% recorded in the year-earlier quarter. A meager 0.8%
upside at company-owned restaurants and flat comps at franchised
restaurants retarded comps growth at Qdoba.
Consolidated restaurant operating margin spiked 160 basis points
(bps) to 15.1%. The expansion in margin was due to a 150 bps
plunge in food and packaging costs and a 40 bps dip in payroll
and employee benefits costs. A 30 bps increase in occupancy and
other costs provided the partial offset.
At quarter end, the company had a total of 2,877 units in its
system, of which 2,250 were Jack in the Box and 627 were Qdoba
restaurants. Out of the total number of units, 2,014 were
At quarter end, Jack in the Box had cash and cash equivalents of
$8.5 million and long-term debt of $405.3 million.
The company bought back 883,000 shares of its common stock during
the fourth quarter. Subsequent to the quarter, the company
repurchased approximately 985,000 shares of its common stock
leaving $50.0 million remaining under the current repurchase
program expiring in November, 2013.
For the first quarter of 2013, the company expects same-store
sales to increase in the range of 1%-2% at the Jack in the Box
company restaurants and 1%-2% at the Qdoba company-owned
For fiscal 2013, the company forecasts same-store sales to grow
2-3% at the Jack in the Box and Qdoba company restaurants.
Overall commodity costs are expected to increase 2-3%.
Restaurants operating margin is estimated in the range of
Earnings per share are estimated in the range of $1.45-$1.60. The
company plans to open 20-25 new Jack in the Box restaurants and
70-85 new Qdoba outlets in 2013.
San Diego-based Jack in the Box underperformed on both counts in
the fourth quarter. Continued lag in revenues remains a
concern for the company. Comps growth at Qdoba was
However, Jack in the Box is in a restructuring mode. We expect
the company to perform better on the back of the closure of
underperforming units, significant refranchising activities and
the transformation of ownership at the higher-margined Qdoba
units, from franchised to company level. Additionally, the deal
to outsource its distribution business by the end of the first
quarter of 2013 should bode well for the investors.
Currently, Jack in the Box carries a Zacks #3 Rank, which
translates into a short-term 'Hold' rating. We are also
maintaining our long-term 'Neutral' recommendation on the stock.
One of its close peers
Panera Bread Co.
) currently carries a Zacks #2 Rank, which translates into a
short-term 'Buy' rating.
JACK IN THE BOX (JACK): Free Stock Analysis
PANERA BREAD CO (PNRA): Free Stock Analysis
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