Why Is Jack In The Box (JACK) Down 19% Since Last Earnings Report?

A month has gone by since the last earnings report for Jack In The Box (JACK). Shares have lost about 19% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Jack In The Box due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Jack in the Box Q4 Earnings Top Estimates, Revenues LagJack in the Box reported mixed fourth-quarter fiscal 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top line also declined year over year.JACK’s Earnings & Revenues DetailsIn the fiscal fourth quarter, operating earnings per share (EPS) was $1.16, beating the Zacks Consensus Estimate of $1.11. The metric rose 5.5% from $1.10 per share reported in the prior-year quarter.Quarterly revenues of $349.3 million missed the consensus mark of $358 million. The top line declined 6.2% on a year-over-year basis.Franchise rental revenues increased 1.5% year over year to $87.3 million. Franchise royalties and other revenues decreased 1.3% year over year to $54.5 million.Franchise contributions to advertising and other services revenues rose 0.5% year over year to $56.1 million. Company restaurant sales in the quarter was $151.4 million compared with $175 million reported in the prior-year quarter.JACK’s Comps DiscussionIn the quarter under review, company-owned same-store sales declined 2.2% year over year against 4.4% growth reported in the prior-year quarter.Same-store sales at franchised stores declined 2% year over year against 3.8% growth reported in the prior-year quarter.Systemwide same-store sales fell 2.1% year over year against 3.9% growth reported in the year-ago quarter. Reduced transactions and an unfavorable mix shift caused this downside.Del Taco PerformanceIn fourth-quarter fiscal 2024, company-owned same-store sales moved down 3% year over year, comprising the decline in franchise same-store and system-operated same-store sales of 4.2% and 3.9%, respectively.Operating Highlights of JACK’sIn the fiscal fourth quarter, the total restaurant-level adjusted margin was 15.1% compared with 18% reported in the prior-year quarter. The decline was attributed to reduced transactions and rising costs from inflation, including higher wages, commodity prices and utility expenses, partially offset by menu price increases.Food and packaging costs (as a percentage of company restaurant sales) fell 80 basis points (bps) year over year to 28.4%.The total franchise level margin was 38.9% in the fiscal fourth quarter compared with 39.2% reported in the prior-year quarter.In the quarter under review, selling, general and administrative expenses accounted for 8.6% of total revenues compared with 11.7% in the prior-year quarter.JACK’s Balance SheetAs of Sept. 29, 2024, cash totaled $54.2 million compared with $185.9 million as of Oct. 1, 2023. Long-term debt (net of current maturities) totaled $1.69 billion as of Sept. 29, compared with $1.72 billion as of Oct. 1, 2023.In the fiscal fourth quarter, the company repurchased 0.3 million shares. As of Sept. 29, management announced the availability of $180 million under its share repurchase program. The company declared a cash dividend of 44 cents per share. The dividend will be paid out on Dec. 30, 2024, to its shareholders on record as of Dec. 12.JACK’s Fiscal 2025 OutlookFor fiscal 2025, the company anticipates adjusted EBITDA to be in the range of $288-$303 million. Depreciation and Amortization expenses are anticipated to be between $58 million and $60 million.Jack in the Box Restaurant Level Margin is expected to be 20-22%. The company expects same-store sales for Jack in the Box in the range of flat to up 1%, whereas for Del Taco segment this is expected to be flat to down 1%.Company-wide operating EPS for fiscal 2024 is expected to be in the range of $5.05-$5.45.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in estimates revision.The consensus estimate has shifted -10.09% due to these changes.VGM ScoresCurrently, Jack In The Box has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Jack In The Box has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.Performance of an Industry PlayerJack In The Box is part of the Zacks Retail - Restaurants industry. Over the past month, Cracker Barrel Old Country Store (CBRL), a stock from the same industry, has gained 9.4%. The company reported its results for the quarter ended October 2024 more than a month ago.Cracker Barrel reported revenues of $845.09 million in the last reported quarter, representing a year-over-year change of +2.6%. EPS of $0.45 for the same period compares with $0.51 a year ago.Cracker Barrel is expected to post earnings of $1 per share for the current quarter, representing a year-over-year change of -27%. Over the last 30 days, the Zacks Consensus Estimate has changed -3.3%.Cracker Barrel has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. 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