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Category: Stock Market and Jack in the Box
Date: 21 November 2019 Stock Price: $84.81 We take a look at the 3rd quarter 2019 earnings report of Jack in the Box, one of the United States largest hamburger chains with over 2200 restaurants. The company is actively buying back their own shares, and they don't have to many issued to start off with. And the company announced the board approved additional share buy backs
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About Jack in the Box
Jack in the Box Inc. (NASDAQ: JACK), based in San Diego, is a restaurant company that operates and franchises Jack in the Box® restaurants, one of the nation’s largest hamburger chains, with more than 2,200 restaurants in 21 states and Guam.
Overview of Jack in the Box's 4th quarter 2019 earnings report
The data refers to the latest quarter unless specified otherwise
- Total revenues: $221.235 million (up from $177.472 million for the same quarter of the previous year)
- Total revenues increased by 24.7% over the last 12 months
- Operating costs and expenses: $172.720 million (up from $141.402 million for the same quarter of the previous year)
- Operating costs and expenses increased by 22.1% over the last 12 months
- Net earnings: $22.061 million (up from $16.269 million for the same quarter of the previous year)
- Diluted earnings per share: $0.86 (up from $0.60 for the same quarter of the previous year)
- PE ratio of Jack in the Box: 23.4
- Dividend declared: $0.4
- Dividend yield of Jack in the Box: 1.9%
- Diluted shares in issue: 25.721 million (down 5.3% from 27.148 million for the same quarter of the previous year)
- Cash and cash equivalents: $125.536 million
- Cash and equivalents per share: $4.88
- Cash and equivalents makes up 5.6% of Jack in the Box's market capital
- Cash and equivalents makes up 13.1% of Jack in the Box's total assets
- Accounts receivable: $45.235 million
- Accounts receivable makes up 4.7% of Jack in the Box's total assets
- Cash generated from operations (for the full fiscal 2019): $168.405 million
- Cash generated from operations per share (for the full fiscal 2019): $6.54
Jack in the Box's management commentary on their 3rd quarter 2019 earnings
SAN DIEGO--(BUSINESS WIRE)--Nov. 20, 2019-- Jack in the Box Inc. (NASDAQ: JACK) today reported financial results for the fourth quarter and fiscal year ended September 29, 2019.
Lenny Comma, chairman and chief executive officer, said, "Our 2019 operating results demonstrate the momentum in the Jack in the Box brand, with same-store sales improving to the strongest performance in four years. We have now achieved our ninth consecutive year of positive same-store sales. "We plan to build on these results by improving the guest experience through operations consistency and reducing wait times, serving indulgent food our guests crave, and targeting investments designed to maximize our returns. With our refranchising initiative complete, we have a renewed focus on expanding unit growth. We look forward to sharing additional details about these initiatives on tomorrow morning's earnings call."
Lenny Comma, chairman and chief executive officer, said, "Our 2019 operating results demonstrate the momentum in the Jack in the Box brand, with same-store sales improving to the strongest performance in four years. We have now achieved our ninth consecutive year of positive same-store sales. "We plan to build on these results by improving the guest experience through operations consistency and reducing wait times, serving indulgent food our guests crave, and targeting investments designed to maximize our returns. With our refranchising initiative complete, we have a renewed focus on expanding unit growth. We look forward to sharing additional details about these initiatives on tomorrow morning's earnings call."
Capital Allocation
The company repurchased approximately 1.4 million shares of its common stock in the fourth quarter of fiscal 2019 at an average price of $87.33 per share for an aggregate cost of $125.3 million and has repurchased approximately 0.7 million shares of its common stock quarter-to-date in the first quarter of fiscal 2020. This leaves approximately $109 million remaining under share repurchase programs authorized by its Board of Directors that expire in November 2020.
On November 15, 2019, the company's Board of Directors authorized an additional $100 million share repurchase program that expires in November 2021. The company also announced today that on November 15, 2019, its Board of Directors declared a cash dividend of $0.40 per share on the company's common stock. The dividend is payable on December 20, 2019, to shareholders of record at the close of business on December 5, 2019.
Guidance
This release includes forward-looking guidance for certain non-GAAP financial measures, including Restaurant-Level Margin and Adjusted EBITDA. The company is unable without unreasonable effort to provide reconciliations of these forward-looking non-GAAP measures.
Fiscal Year 2020 Guidance
The following guidance and underlying assumptions reflect the company’s current expectations for the fiscal year ending September 27, 2020. Fiscal 2020 and fiscal 2019 are 52-week years, with 16 weeks in the first quarter, and 12 weeks in each of the second, third and fourth quarters.
The company repurchased approximately 1.4 million shares of its common stock in the fourth quarter of fiscal 2019 at an average price of $87.33 per share for an aggregate cost of $125.3 million and has repurchased approximately 0.7 million shares of its common stock quarter-to-date in the first quarter of fiscal 2020. This leaves approximately $109 million remaining under share repurchase programs authorized by its Board of Directors that expire in November 2020.
On November 15, 2019, the company's Board of Directors authorized an additional $100 million share repurchase program that expires in November 2021. The company also announced today that on November 15, 2019, its Board of Directors declared a cash dividend of $0.40 per share on the company's common stock. The dividend is payable on December 20, 2019, to shareholders of record at the close of business on December 5, 2019.
Guidance
This release includes forward-looking guidance for certain non-GAAP financial measures, including Restaurant-Level Margin and Adjusted EBITDA. The company is unable without unreasonable effort to provide reconciliations of these forward-looking non-GAAP measures.
Fiscal Year 2020 Guidance
The following guidance and underlying assumptions reflect the company’s current expectations for the fiscal year ending September 27, 2020. Fiscal 2020 and fiscal 2019 are 52-week years, with 16 weeks in the first quarter, and 12 weeks in each of the second, third and fourth quarters.
- System same-store sales growth of approximately 1.5 to 3.0 percent.
- Restaurant-Level Margin of approximately 25.0 percent of company restaurant sales, which includes expected commodity cost inflation of approximately 4.0 percent, and high-single-digit wage inflation.
- SG&A as a percentage of revenues of approximately 8.0 to 8.5 percent.
- G&A as a percentage of system-wide sales of approximately 1.7 to 1.9 percent.
- Approximately 25 to 35 new restaurants opening system-wide, substantially all of which will be franchise locations.
- Capital expenditures and tenant improvement allowances of approximately $45 to $55 million, collectively, excluding purchases of assets held for sale and leaseback.
- Tax rate of approximately 26.0 to 27.0 percent, subject to fluctuations arising from the impact of excess tax benefits from share-based compensation arrangements.
- Adjusted EBITDA of approximately $265 to $275 million.
Jack in the Box (NASDAQ: JACK) stock price history
The image below, obtained from Google shows the stock price history of Jack in the Box (NASDAQ: JACK) for the last 5 years and it's been an okay time for Jack in the Box stockholders over the last 5 years. 5 years ago the stock was trading at $73.40 and its currently trading at $84.81. That's a 15.6% return provided to Jack in the Box stockholders over the last 5 years, which is by no means shooting the lights out but at least its a positive return. The stock of Jack in the Box is trading at closer to its 52 week high of $93.12 than it is to its 52 week low of $70.77 which to us is a clear indication that the short term sentiment and momentum of Jack in the Box stock is positive at this point in time. The stock of Jack in the Box jumped by almost 3% in after hours trade following the release of their 4th quarter 2019 and full fiscal 2019 earnings report
Recent coverage of Jack in the Box
The extract below covers the latest regarding Jack in the Box as obtained from TheStreet.com.
The restaurant industry's third-quarter results should show a "healthy" move away from discounting, and selective stocks within the group are particularly well-positioned, an analyst at SunTrust Robinson Humphrey said. Analyst Jake Bartlett in Boston affirmed buy ratings on five stocks: Chipotle (CMG - Get Report) , Jack in the Box (JACK - Get Report) , Noodles (NDLS - Get Report) , Shake Shack (SHAK - Get Report) and Carrols (TAST - Get Report) .
The restaurant industry's third-quarter results should show a "healthy" move away from discounting, and selective stocks within the group are particularly well-positioned, an analyst at SunTrust Robinson Humphrey said. Analyst Jake Bartlett in Boston affirmed buy ratings on five stocks: Chipotle (CMG - Get Report) , Jack in the Box (JACK - Get Report) , Noodles (NDLS - Get Report) , Shake Shack (SHAK - Get Report) and Carrols (TAST - Get Report) .
Jack in the Box (NASDAQ: Jack) latest stock valuation
So what is Jack in a Box stock worth based on their 4th quarter 2019 earnings report and their fiscal guidance provided for their 2020 fiscal year? Based on their earnings report and the fiscal guidance provided our valuation model provides a target (full value) price for Jack in the Box at $79.80 a stock (up from our 3rd quarter 2019 earnings report valuation of Jack in the Box. The increased valuation levels is largely due to the continued share buy backs of the group that will ensure future profits are split amongst fewer stockholders which bodes well for the company's future stock price). But based on their earnings and their share buy back programs we believe the stock of Jack in the Box is slightly overvalued
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price, which in this case is $79.80, thus a good entry point into Jack in the Box would be at $71.80 or below.
We expect the stock of Jack in the Box to pull back slightly from current levels in coming weeks and months to levels closer to our target (full value) price. We therefore rate the stock of Jack in the Box as a hold
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price, which in this case is $79.80, thus a good entry point into Jack in the Box would be at $71.80 or below.
We expect the stock of Jack in the Box to pull back slightly from current levels in coming weeks and months to levels closer to our target (full value) price. We therefore rate the stock of Jack in the Box as a hold
Next earnings release for Jack in the Box
It is expected that Jack in the Box the will release their 1st quarter 2020 earnings report in late February 2020.