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Jack in the Box (JACK) to Post Q3 Earnings: What's in Store?

Jack in the Box JACK is scheduled to report third-quarter fiscal 2020 results on Aug 5, after market close. In the last-reported quarter, the company delivered a negative earnings surprise of 26.5%.

How Are Estimates Placed?

The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at $1.01 per share, indicating a decline of 5.6% from $1.07 recorded in the year-ago quarter. For revenues, the consensus mark is pegged at $236.6 million, suggesting a 6.4% increase from the year-ago figure.

Let's take a look at how things have shaped up in the quarter.

Jack In The Box Inc. Price and EPS Surprise

  Jack In The Box Inc. Price and EPS Surprise

Jack In The Box Inc. price-eps-surprise | Jack In The Box Inc. Quote

Factors at Play

The company’s top line in the quarter is likely to have benefited from robust same-store sales. On Jun 10, the company provided an operational update, whereby same-store sales through the first eight weeks (ended Jun 7, 2020) grew 5% from the corresponding period of 2019. Also, initiatives like menu innovation along with increased focus on catering, delivery and marketing are likely to have boosted the top line in the to-be-reported quarter. The Zacks Consensus Estimate for franchise rental revenues of $67 million suggests an increase of 5.7% year over year.

However, restaurant sales and franchise royalties and other revenues are pinned at a respective $68 million and $39.4 million, indicating a decline of 13.3% and 2% from the year-ago reported figures.

Notably, decline in store traffic along with high costs related to various sales-boosting initiatives as well as labor inflation is expected to have affected margins in the to-be-reported quarter. The coronavirus pandemic is likely to have materially impacted the third-quarter performance.

What Our Model Says

Our proven model does not predict an earnings beat for Jack in the Box this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. But that's not the case here.

Earnings ESP: Jack in the Box has an Earnings ESP of -5.63%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Peer Releases

Domino's Pizza, Inc. DPZ reported second-quarter 2020 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Adjusted earnings in the quarter under review were $2.99 per share, which outpaced the Zacks Consensus Estimate of $2.25. The reported figure also improved 36.5% on a year-over-year basis. Quarterly revenues of $920 million beat the consensus mark $899 million and improved 13.4% year over year.

Yum China Holdings, Inc. YUMC reported second-quarter 2020 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Adjusted earnings of 35 cents beat the Zacks Consensus Estimate of 23 cents. However, the reported figure declined 24% from the year-ago quarter. The company’s total revenues of $1,902 million surpassed the consensus mark of $1,883 million. However, the figure fell 11% year over year.

BJs Restaurants Inc BJRI reported second-quarter 2020 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Adjusted net loss of 99 cents per share was narrower than the Zacks Consensus Estimate of a loss of $1.81. In the year-ago period, the company had reported adjusted earnings of 68 cents per share. Total quarterly revenues of $128 million beat the consensus estimate of $126 million by 1.3%. However, the top line declined 57.5% on a year-over-year basis.

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

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