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Did Jack in the Box’s EPS Outperform Analysts’ Estimate in Q2?

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Second-quarter estimates

Analysts expect Jack in the Box (JACK) to post adjusted EPS of $0.93, which represents a rise of 16.3% from $0.80 in the corresponding quarter of fiscal 2018.

Revenue growth, EBIT margin expansion, a lower effective tax rate, and share repurchases are likely to drive the company’s EPS during the quarter.

In the quarter, analysts expect JACK’s EBIT margin to expand from 21.0% in the corresponding quarter of fiscal 2018 to 21.4%. The company’s refranchising of its company-owned restaurants and its lower selling, general, and administrative expenses are expected to drive its EBIT. In the quarter, the company’s interest expenses are likely to rise, thus offsetting some of the gains in its EPS.

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JACK’s effective tax rate for the quarter is expected to be 26.8% compared to 29.8% in the corresponding quarter of the previous year. From the beginning of the third quarter of fiscal 2018 until the end of the first quarter of fiscal 2019, the company repurchased 2.8 million shares for ~$240 million. At the end of the first quarter of fiscal 2019, the company had $101.0 million still available under its share repurchase program.

Peer comparison and outlook

During the comparable quarter, Wendy’s (WEN) posted EPS growth of 27.3%, while Restaurant Brands International (QSR) and McDonald’s (MCD) saw EPS falls of 16.7% and 0.6%, respectively.

For fiscal 2019, analysts expect JACK to post adjusted EPS of $4.26, which represents a rise of 12.5% from $3.79 in fiscal 2018.

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