Earnings and Losses

Earnings Cheat Sheet: Jack in the Box Suffers, Qdoba Remains Strong

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In Brief...

Jack in the Box Inc. (JACK) operates 2,700 combined Jack in the Box and Qdoba Mexican Grill locations across 18 states, approximately half of which are company operated, the rest being franchised out. JACK beat the street in terms of adjusted EPS, as investors sought 4Q profits of $0.36/share. Same-store sales fell 3.3% at Jack in the Box but grew 5.6% at JACK-owned Qdoba Mexican Grill. Although management has its work cut out for it with respect to a turnaround at its namesake Jack in the Box locations, we believe Qdoba's growth opportunities have been underappreciated by a market that has rewarded other fast-casual operators with lofty valuations.. Those invested in JACK can hope that such a dynamic indicates a capitulation bottom, but those who may be thinking of dipping their toes in the water would likely be most prudent to wait for a test of aforementioned support..

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