The San Diego-based company reported earnings of $31.1 million, or $1.19 a share, compared with $12.9 million, or 43 cents a share, a year ago. Adjusted earnings came to $1.35 s share, beating analysts' expectations of $1.28. Revenue totaled $290.8 million, surpassing Wall Street's forecast of $274.43 million.
Jake Bartlett, an analyst with SunTrust Robinson Humphrey, said in a note to investors that "while we are encouraged by consumers' response to JACK's value promotions, we note that company-store traffic decelerated sharply (-3.3%) and its underperformance vs. peers widened (320bps) in the quarter as a whole, suggesting that JACK remains at a disadvantage in the current promotional environment."
Bartlett estimated that Jack in the Box's same-store sales improved by 1% in the final nine weeks of the first quarter after introducing its value-priced BLT Cheeseburger Combo, a $4.99 promotion, and the $3 Loaded Fries.
"While it is encouraging that consumers responded well to JACK's value approach, decelerating traffic (-3.3% at company stores vs. +2.0% in F4Q18) and widening SSS underperformance in F1Q19 as a whole shows that JACK remains at a disadvantage in the current value-oriented promotional environment," Bartlett wrote.
Bartlett rated the company a buy with a $103 price target.
Jack in the Box reiterated its fiscal 2019 guidance. For fiscal 2019, the company expects same-store sales growth to range from zero to 2.0%, and it also expects to open 25 to 35 new restaurants with the majority of them being franchised restaurants. Adjusted EBITDA is expected to range between $260 million-$270 million, while its effective tax rate is expected to be between 26%-27% in 2019.
Lenny Comma, chairman and CEO, said in a statement that "same-store sales improved throughout the first quarter after we pivoted to a more value-oriented approach."
"While our strategy around value continues to avoid deep discounting which we believe is not in the best interests of the long-term health of the brand, adding value with a bundled offer at an attractive price point allowed us to compete more effectively in this value-centric environment," Comma said.
The company said that it continues "to explore a range of strategic and financing alternatives to maximize shareholder value," including such potential alternatives as a sale of the company or executing on the company's plans to increase its leverage.
"The company's Board has not set a timetable for the conclusion of this process nor has it made any decision related to any strategic or financing alternative at this time," the statement continued. "The company has had discussions with potential buyers; however, there can be no assurance that the exploration of strategic and financing alternatives will result in a transaction. That said, in the absence of a strategic transaction, the company remains committed to implementing a new capital structure as soon as practicable. That capital structure could include, among other things, a securitization or bond issuance."