Jack In The Box (JACK) Up 4.8% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Jack In The Box reported mixed Q2 fiscal 2024 results, with earnings exceeding estimates but revenues falling short, indicating potential challenges ahead [2][3]. Earnings & Revenues Details - Operating earnings per share (EPS) for Q2 were $1.46, surpassing the Zacks Consensus Estimate of $1.43, but down 0.7% from $1.47 in the prior year [3]. - Quarterly revenues totaled $365.3 million, missing the consensus mark of $370 million by 1.2%, and declined 7.7% year-over-year, primarily due to Del Taco's refranchising efforts [3]. - Franchise rental revenues increased by 2.8% year-over-year to $85.8 million, while franchise royalties and other revenues rose by 2% to $55.1 million, exceeding projections [3]. Comps Discussion - Same-store sales at Jack In The Box stores fell by 0.6% year-over-year, contrasting with a 10.6% growth in the prior year [5]. - Franchised store same-store sales declined by 2.6% year-over-year, compared to a 9.4% increase in the previous year [5]. - Systemwide same-store sales decreased by 2.5% year-over-year, down from 9.5% growth reported a year ago, attributed to reduced transactions and a delay in product launches [5]. Operating Highlights - The total restaurant-level adjusted margin improved to 20.8% from 19.2% in the prior year, driven by additional company-owned restaurants and commodity deflation [7]. - Food and packaging costs as a percentage of company restaurant sales decreased by 180 basis points to 27.5% [7]. - Selling, general, and administrative expenses accounted for 10.3% of total revenues, slightly above the estimated 10.2% [8]. Balance Sheet - As of April 14, 2024, cash stood at $20.2 million, down from $157.7 million on October 1, 2023, while long-term debt was $1.71 billion [9]. - The company repurchased 0.2 million shares for $15 million during the quarter and has $210 million available under its share repurchase program [9]. - A cash dividend of 44 cents per share was declared, payable on June 25, 2024 [9]. Fiscal 2024 Outlook - For fiscal 2024, the company anticipates Adjusted EBITDA between $325 million and $330 million, with same-store sales expected to be flat to low single digits [10]. - Operating EPS for fiscal 2024 is projected to be in the range of $6.25 to $6.40 [10]. - Consensus estimates have trended downward, with a shift of -6.01% noted [10]. VGM Scores - Jack In The Box has a poor Growth Score of F and a similar score for momentum, but a strong value score of A, placing it in the top quintile for value investment strategy [11]. Industry Performance - Jack In The Box operates within the Zacks Retail - Restaurants industry, where competitor Starbucks reported a revenue decline of 1.8% year-over-year [13]. - Starbucks' EPS for the last quarter was $0.68, down from $0.74 a year ago, with a projected earnings decline of 6% for the current quarter [13].