Why is Jack In The Box (JACK) down 5.4% since the last earnings report?
IIt’s been about a month since the last Jack In The Box (JACK) revenue report. Stocks lost around 5.4% during that time, underperforming the S&P 500.
Will the recent negative trend continue until its next results release, or is Jack In The Box about to make a breakthrough? Before we dive into how investors and analysts have reacted in recent times, let’s take a quick look at his latest earnings report to better understand the important catalysts.
Jack in the Box Top Fourth Quarter Earnings, Late Earnings Estimates
Jack in the Box posted mixed results for the fourth quarter of fiscal 2021, in which profits exceeded Zacks’ consensus estimate, but revenues were not identical. While the bottom line broke the consensus mark for the sixth consecutive quarter, the top line missed the same after beating in the previous seven quarters.
Income and income details
In the fiscal fourth quarter, adjusted profit from continuing operations was $ 1.80 per share, which exceeds Zacks’ consensus estimate of $ 1.74. Net income improved 9.8% year-on-year.
Quarterly revenue of $ 278.5 million fell short of Zacks’ consensus estimate of $ 288 million. However, revenue increased 9% year-on-year. Franchise rental revenue increased 7.3% year over year to $ 84.4 million. Franchise royalties and other income increased 9.8% year-over-year to $ 49.3 million due to higher same-store franchise sales. At the same time, franchise contributions to advertising and other services revenue grew 9% year-on-year to $ 49.2 million. Corporate restaurant sales increased from $ 86.8 million to $ 95.6 million.
Comps at Jack in the Box stores fell 4.4% in the fiscal fourth quarter compared to 9.6% growth in the previous year quarter. The drop in line-ups was mainly due to poor traffic, which was partially offset by an increase in average control.
Same-store sales at franchise stores increased 0.6% year-over-year, compared to 12.4% growth in the previous year quarter. At the same time, system-wide same-store sales grew 0.1% year-over-year, compared to a 12.2% gain in the same quarter a year earlier.
In the fiscal fourth quarter, the adjusted margin at the restaurant level was 20.1%, compared to 27% in the previous year quarter. This was due to the takeover of low-volume franchise restaurants, rising food and packaging costs, 9.8% wage inflation, and rising costs for utilities and maintenance and maintenance. repair. The decrease was offset by lower incentive compensation and increases in menu prices.
Food and packaging costs (as a percentage of corporate restaurant sales) increased 140 basis points to 31% year-over-year. Commodity costs in the quarter increased 11.8% year-over-year. This increase is attributable to higher costs for pork, beef and beverages.
The franchise margin was 41.4% in the fiscal fourth quarter, compared to 41.3% in the previous year quarter.
During the quarter, selling, general and administrative expenses represented 7.7% of total revenues, compared to 5.8% in the previous year quarter.
As of October 3, 2021, cash (including restricted cash) was $ 55.3 million, compared to $ 199.7 million as of September 27, 2020. Inventories during the quarter were 2 , $ 3 million, compared to $ 1.8 million as of September 27, 2020. Long-term debt (net of current maturities) amounted to $ 1,273.4 million as of October 3, compared to $ 1,376.9 million at the end of September 27, 2020.
During the fiscal fourth quarter, the company repurchased 0.7 million common shares for $ 70 million. On November 19, 2021, the company’s board of directors announced an additional $ 200 million share buyback program that expires on November 20, 2023.
The company declared a cash dividend of 44 cents per share. The dividend will be paid on December 23, 2021 to shareholders of record on December 9, 2021.
Outlook for 2022
General and administrative expenses are expected to be $ 92 million to $ 97 million in 2022. For fiscal 2022, the wage rate forecast held by the company is expected to increase 8-10% from 2021. For fiscal year 2022, the forecast for raw materials is expected to be up 6 -7% from 2021. The margin at the restaurant level is expected to be 20-21%.
How have the estimates evolved since?
As it turns out, new estimates have trended downward over the past month. The consensus estimate has changed by -7.96% due to these changes.
At the moment, Jack In The Box has an average Growth score of C, although it lags well behind the Momentum score front with an F. However, the action received an A rating from the side. value, which places it in the top 20% for this investment strategy.
Overall, the stock has an overall VGM score of B. If you’re not strategy-focused, this score is the one you should be interested in.
The estimates have generally trended downward for the stock, and the magnitude of these revisions indicates a downward change. Notably, Jack In The Box has a Zacks Rank # 3 (Hold). We expect the stock to come back online in the coming months.
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