Why Jack in the Box Inc. (NASDAQ: JACK) stock is rising

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Jack in the Box Inc. (NASDAQ: JACK) stock rose over 3.5% on 16th May, 2019 (As of 10:26 am GMT-4; Source: Google finance) after the company posted mixed results for the second quarter of FY 19. The company completed the sale of Qdoba Restaurant Corporation (“Qdoba”) on March 21, 2018. Earnings from continuing operations were $25.1 million, for the second quarter of fiscal 2019 compared with $25.0 million for the second quarter of fiscal 2018.

JACK in the second quarter of FY 19 has reported the adjusted earnings per share of 99 cents, beating the analysts’ estimates for the adjusted earnings per share of 92 cents, according to Zacks Investment Research. The company had reported the adjusted revenue of $215.7 million in the second quarter of FY 19, missing the analysts’ estimates for revenue of $217.4 million. Jack in the Box  system same-store sales grew 0.2 percent for the quarter. Company same-store sales rose 0.6 percent in the second quarter due to average check growth of 2.8 percent, partially offset by a 2.2 percent decrease in transactions.

Moreover, Restaurant-Level Margin, a non-GAAP measure, expanded by 120 basis points to 27.6 percent of company restaurant sales in the second quarter of fiscal 2019 from 26.4 percent a year ago. The increase was mainly due to the benefit of refranchising and lower maintenance and repairs expenses, partially offset by wage and commodity inflation. Food and packaging costs, as a percentage of company restaurant sales, declined by 30 basis points in the second quarter as menu price increases and favorable product mix offset higher ingredient costs. Commodity costs rose by 0.7 percent in the second quarter as compared with the prior year. Franchise-Level Margin, a non-GAAP measure, as a percentage of total franchise revenues, was 41.7 percent in the second quarter of fiscal 2019 compared with 59.8 percent in the prior year quarter

For FY 19, the company expects System same-store sales to be of approximately flat to up 1.0 percent, tax rate to be of approximately 25.0 to 26.0 percent, Restaurant-Level Margin to be of approximately 26.0 to 27.0 percent of company restaurant sales and SG&A as a percentage of revenues of approximately 8.5 to 9.0 percent. Further, for FY 19, the company expects approximately 25 to 35 new restaurants opening system-wide, capital expenditures to be of approximately $30 to $35 million and adjusted EBITDA to be in the range of approximately $260 to $270 million.

 

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