Jack in the Box Inc.
) recently posted first quarter fiscal 2013 adjusted earnings of
54 cents per share. The results were significantly above the
Zacks Consensus Estimate of 39 cents and the year-ago quarter's
earnings of 25 cents. The company's business has gained from its
improved business strategy.
On a reported basis, including gains from refranchising and
restructuring charges, earnings per share came in at 54 cents
compared with 27 cents in the year-ago period.
Behind the Headline Number
During the quarter, total revenues increased 1.7% year over
year to $465.5 million. Total revenues surpassed the Zacks
Consensus Estimate of $458.0 million. The rise in revenues was
attributable to a 12.4% surge in franchised restaurant sales to
$105.4 million. However, the company restaurant revenues dipped
1.1% year over year to $360.1 million.
Comparable store sales (comps) at Jack in the Box climbed
1.9%, driven by a 2.1% upside at the company-owned restaurants
and a 1.8% rise at franchised restaurants. In the year-earlier
quarter, system-wide comps grew by 3.6%.
However, same-store sales at Qdoba's restaurant slackened to
1.0% from 3.8% recorded in the year-earlier quarter. A 1.5%
upside at the company-owned restaurants and 0.5% rise at
franchised restaurants retarded comps growth at Qdoba.
The company's consolidated restaurant operating margin was
15.7%, up 220 basis points (bps) year over year. The expansion in
margins was due to a 130 bps plunge in food and packaging costs,
a 40 bps dip in payroll and employee benefits costs and a 50 bps
fall in occupancy and other costs.
At quarter end, the company had a total of 2,891 units in its
system, of which 2,255 belonged to Jack in the Box while 636
restaurants were Qdoba's. Out of the total number of units, 2,015
At quarter end, Jack in the Box had cash and cash equivalents of
$9.5 million and long-term debt of $374.9 million.
The company bought back 985,000 shares worth $26.9 million
during the first quarter. Currently, $50.0 million and $100
million shares have remained under the existing share repurchase
programs expiring in November, 2013, and November, 2014,
For the second quarter of 2013, the company projects
same-store sales to be consistent at the Jack in the Box company
restaurants whereas comps at the Qdoba company-owned restaurants
will be flat to down 2%.
For fiscal 2013, the company reduced its same-store sales
guidance to 1.5%-2.5% from 2%-3% at the Jack in the Box
restaurants. Qdoba company restaurants' comps will be within
1%-2%. The company has reiterated its guidance for overall
commodity costs to 2% -3%. Restaurants operating margin is
estimated in the range of 15.5% -16.0%.
Capital expenditures are projected to be wtihin $95 and $105
million. Earnings per share (restructuring charges and gains from
refranchising excluded) are estimated in the range of
$1.48-$1.63. The company plans to unveil 20-25 new Jack in the
Box restaurants and 70-85 Qdoba outlets in fiscal 2013.
San Diego-based Jack in the Box outperformed on both counts in
the first quarter. Further, Jack in the Box is in a restructuring
mode. We expect the company to perform better on the back of
significant refranchising activities and the transformation of
ownership at the higher-margined Qdoba units, from franchised to
the company level.
However, lower comps growth both at Jack in the Box and Qdoba
restaurants is a huge matter of concern.
Jack in the Box retains a Zacks Rank #2 (Buy). Another
AFC Enterprises Inc.
) recently declared its preliminary fourth quarter and full year
2012 results. The company projects its adjusted earnings per
share for the full year of 2012 to be within $1.23-$1.24, up from
99 cents in 2011. AFC also provided an optimistic outlook for
2013. AFC currently holds a Zacks Rank #2 (Buy).
Other restaurateurs, which are expected to perform well moving
Krispy Kreme Doughnuts, Inc.
Burger King Worldwide, Inc.
). Both carry a Zacks Rank #2 (Buy).
AFC ENTERPRISES (AFCE): Free Stock Analysis
BURGER KING WWD (BKW): Free Stock Analysis
JACK IN THE BOX (JACK): Free Stock Analysis
KRISPY KREME (KKD): Free Stock Analysis
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