Jack In The Box Shares Surge 7% As Q3 Results Top View, Boost 2014 Outlook

(RTTNews) - Shares of Jack in the Box, Inc. (JACK) surged more than seven percent in extended trading on Wednesday after the restaurant operator reported results for the third quarter that topped analysts' expectations. The company also raised its earnings guidance for the full-year 2014.

The company reported a profit for the third quarter compared to a loss last year, which was weighed down by losses from discontinued operations. The results were boosted by higher same-store sales and improved operating margins.

Both operating earnings per share and quarterly revenues topped analysts' expectations. The company also raised its earnings guidance for the full-year 2014.

"Third quarter operating earnings per share increased 59 percent, driven by another quarter of better than expected same-store sales growth at Qdoba Mexican Grill, solid same-store sales growth at Jack in the Box, margin expansion, lower overhead, and a nearly 10 percent reduction in our diluted share count as we continued to use our growing free cash flow to return cash to shareholders," Chairman and CEO Lenny Comma said in a statement.

The San Diego-based company reported net earnings of $24.70 million or $0.61 per share for the third quarter, compared to a net loss of $5.66 million or $0.12 per share in the year-ago quarter.

Earnings from continuing operations for the quarter grew to $26.13 million or $0.64 per share from $17.30 million or $0.38 per share last year.

Excluding items, operating earnings, or adjusted earnings from continuing operations, was $0.65 per share, compared to $0.41 per share in the prior-year quarter.

On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.57 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter decreased to $348.49 million from $350.33 million in the same quarter last year, and topped thirteen Wall Street analysts' consensus estimate of $343.27 million.

Company restaurant sales, which accounted for 75.9 percent of total revenues, declined to $264.40 million from $270.86 million, while franchise revenues increased to $84.09 million from $79.47 million in the prior-year quarter.

System-wide same-store sales at Jack in the Box increased 2.4 percent, and Qdoba system-wide same-store sales increased 7.2 percent over last year.

The company noted that Jack in the Box same-store sales increase was driven primarily by growth in its breakfast and late-night dayparts.

Consolidated operating margin for the quarter improved 350 basis points to 12.3 percent from last year's 8.8 percent as total company restaurant costs, as a percentage of total sales, declined 120 basis points, and selling, general and administrative expenses, as a percentage of total sales, decreased 130 basis points.

Looking ahead to the fourth quarter, Jack in the Box forecasts same-store sales at Jack in the Box company restaurants to increase about 1.5 to 2.5 percent, and increase about 5.0 to 6.0 percent at Qdoba company restaurants.

For fiscal 2014, Jack in the Box raised operating earnings guidance to a range of $2.38 to $2.45 per share fro the prior forecast range of $2.25 to $2.35 per share. Street is currently looking for full-year 2014 earnings of $2.37 per share.

The company projects full-year same-store sales to increase about 1.5 to 2.0 percent at Jack in the Box company restaurants and increase about 5.0 to 5.5 percent at Qdoba company restaurants.

JACK closed Wednesday's regular trading session at $55.45, down $2.11 or 3.67% on a volume of 0.88 million shares. However, the stock surged $4.05 or 7.30% in after-hours trading.