Jack in the Box (JACK) dropped in yesterday's after-hours session upon news of the company's Q4 results. You can't blame the bottom line for the poor stock performance. The fast-food joint earned 70 cents per share from continuing operations versus the 45 cents per share from continuing operations earned in the comparable quarter. Did such a growth rate deserve a nearly 6% cut in share price? Analysts were only looking for 55 cents per share, according to Earnings.com.
Well, Wall Street apparently wasn't satisfied with the outlook, as this Reuters article points out. Traders are obviously more concerned with where Jack in the Box may be heading as opposed to where it's been.
I personally hate the same-store sales. They went down 6% for the Jack in the Box brand, and they decreased 3.1% for the Qdoba Mexican Grill restaurants. These numbers represent a negative trend, as comps were better in the previous year's reporting period.
Same-store sales are very important, and they indicate to me whether management is on the right track when it comes to marketing and promotions. Obviously, the company needs to get aggressive and be on top of those comps.
As the press release indicates, Jack in the Box is in the midst of refranchising locations. By increasing exposure to franchise owners, the company will be able to focus on expanding brand equity and developing menus that can drive shareholder value.
But it will take time for Jack in the Box to position itself properly for future growth. Considering how the stock has been acting this year, I'm not so keen on stepping up and buying at this point. Especially when better alternatives exist in this sector. You've got McDonald's (MCD), Burger King (BKC), and Yum! Brands (YUM) to choose from. Are you going to consider Jack in the Box before those arguably more impressive entities?
I would say that Jack in the Box should be looked at later on. For now, I'll take a pass on the stock.
Disclosure: I don't own any company mentioned; positions can change without notice.
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Reader Comments (Page 1 of 1)
11-26-2009 @ 9:30PM
S Chamberlain said...
Those with inside knowledge of the company know to sell their stock and get out quickly. Rarely has a company made such bad decisions. They have put the talent on the street to reduce overhead. Their new leadership team comes from the convenience store industry and the CEO has a package that rewards bad long term strategy. It won't be long before the results can't be turned around.