Jack in the Box Rises on Solid Earnings Beat

Jack in the Box Inc. (NASDAQ: JACK) reported its fiscal second-quarter financial results after the markets closed on Wednesday. This company posted $0.85 in earnings per share (EPS) on $361.2 million in revenue, versus consensus estimates of $0.70 in EPS on revenue of $360.9 million. In the same period of last year, it posted EPS of $0.69 and $358.1 million in revenue.

In terms of third-quarter guidance, the company expects same-store sales to be in the range of roughly down 2% to flat at company restaurants, compared to a 5.5% increase from last year. These sales were negatively affected by heavy rainfall and flooding in Houston, where 17% of Jack in the Box company restaurants are located. The consensus estimates for the fiscal third quarter call for $0.93 in EPS on $374.71 million in revenue.

During this past quarter, franchise margin as a percentage of total franchise revenues improved to 53.8% from 51.7% in the prior year quarter.

Jack in the Box system same-store sales were flat for the quarter and lagged the QSR sandwich segment by 2.7 percentage points for the comparable period. At the same time, Qdoba same-store sales increased 2.1% systemwide and 3.1% for company restaurants in the second quarter.
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Lenny Comma, chairman and CEO, commented:

Operating earnings per share for the second quarter exceeded our expectations and guidance, and resulted primarily from healthy margins and cost controls combined with mark-to-market adjustments and a lower tax rate. We were pleased with the solid sales performance at Qdoba company restaurants, which was driven by traffic growth, as well as with the improvement in labor costs and margins as compared to the first quarter.

He continued:

At the Jack in the Box brand, system same-store sales were flat for the quarter as compared to an increase of 8.9 percent in the prior year. In late January, we introduced multiple upgrades to the core menu at our Jack in the Box restaurants system-wide, and in the latter half of the quarter, we featured the improved products in marketing messages at price points conveying both value and quality.

On the books, cash and cash equivalents totaled $8.8 million at the end of the quarter, compared to $17.7 million at the end of the previous fiscal year.

Shares of Jack in the Box were trading up 14.4% at $74.51 midday Thursday, with a consensus analyst price target of $81.15 and a 52-week trading range of $61.78 to $98.26.