Jack in the Box (JACK) Q4 Earnings Miss, Sales Beat Estimates

Shutterstock photo

Jack in the Box Inc. JACK reported mixed fourth-quarter fiscal 2018 results, wherein the bottom line lagged the Zacks Consensus Estimate but the top line surpassed the same. Following the quarterly results, shares of the company increased 1.8% in after-hours trading. However, in a year's time, the stock has lost 2.8% against the industry 's 12.7% growth.

Adjusted earnings from continuing operations came in at 77 cents per share, which missed the consensus mark of 83 cents. However, the reported figure increased 5.5% on a year-over-year basis. Total sales of $177.5 million exceeded the consensus mark of $174 million but decreased 23.5% year over year.

Comps Discussion

Comps at Jack in the Box's stores inched up 0.8% compared to the prior-year quarter's decline of 2%. The uptick was driven by average check growth of 2.8%, partially offset by a 2% decline in transactions. In third-quarter fiscal 2018, the company had reported comps growth of 0.6%.

Same-store sales at franchised stores rose 0.4% compared to a 0.7% decline in the prior-year quarter. The metric rose 0.5% in the previous quarter. System-wide same-store sales were up 0.5% compared to a decline of 1% in the prior year quarter. In third-quarter fiscal 2018, system-wide same-store sales increased 0.5%.

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

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

Operating Highlights

Jack in the Box's consolidated restaurant operating margin was 22.5%, up 330 basis points (bps) year over year.

Restaurant-level EBITDA increased 300 bps from the year-ago quarter to 26.1%. The upside was owing to benefits from refranchising, partially offset by wage inflation as well as higher repairs, maintenance costs and cost of food packaging.

In the fiscal fourth quarter, franchise operating margin was 50%, down 210 bps year over year. Franchise EBITDA was 58.6%, reflecting a year-over-year decline of 170 bps. The downside can be attributed to rise in costs in the current quarter.

Balance Sheet

As of Sep 30, 2018, cash totaled $2.7 million compared with $4.5 million as of Oct 1, 2017 (end of fourth-quarter and fiscal 2017). Inventories in the quarter under review amounted to $1.9 million, down from $3.4 million at the end of fiscal 2017.

Long-term debt summed $1,037.9 million as of Jul 2, 2018 compared with $1,080 million at the end of fiscal 2017. Cash flows from operating activities declined to $104.1 million in the fourth quarter from $133.7 million at the prior-year quarter end.

The company repurchased 1.6 million for $140 million in fourth-quarter fiscal 2018. Additionally, it has $41 million left under the current authorization.

2019 Outlook

Comps at Jack in the Box system restaurants are envisioned to be in the range of flat to up 2%. Meanwhile, the company continues to expect Restaurant-Level EBITDA within the 26-27% band.

For fiscal 2019, adjusted EBITDA is anticipated between approximately $260 million and $270 million. Capital expenditures are estimated roughly in the range of $30-$35 million.

Zacks Rank & Key Picks

Jack in the Box carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same space include Dunkin' Brands Group, Inc. DNKN , Dave & Buster's Entertainment, Inc. PLAY and Darden Restaurants, Inc. DRI , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Dunkin' Brands Group has an impressive long-term earnings growth rate of 12.4%.

Dave & Buster's Entertainment delivered positive earnings surprise in each of the trailing four quarters, with the average being 13.7%.

Darden Restaurants reported better-than-expected earnings over the preceding four quarters, with the average being 5.1%.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Dunkin' Brands Group, Inc. (DNKN): Free Stock Analysis Report

Jack In The Box Inc. (JACK): Free Stock Analysis Report

Dave & Buster's Entertainment, Inc. (PLAY): Free Stock Analysis Report

Darden Restaurants, Inc. (DRI): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: DNKN , JACK , PLAY , DRI

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?