Jack in the Box (NYSE: JBX) shares got a slight boost today after the fast-food chain maintained its previous forecast for a fourth-quarter profit just off analyst expectations, but announced a share buyback and offered a healthy outlook for the first quarter and fiscal 2005.
In a comprehensive release relating its strategy to investors, Jack in the Box said that fourth-quarter earnings would come in at $0.49 per share, bringing the full year's earnings to $2.18 (excluding a $0.15 refinancing charge taken in the first quarter), or a penny short of the analyst estimate. But the company also said it expects to earn $0.69 per share on $745 million in first-quarter revenues, or better than the current analyst estimate of $0.64 per share and $700 million in sales. For fiscal 2005, the company is looking to earn $2.43 per share on $2.5 billion in revenues, ahead of the analyst estimate of $2.36 per share and $2.37 billion in revenues.
The company also announced a new $35 million share-repurchase program good through the end of fiscal 2005.
In the release, Jack in the Box detailed its outline for both continued brand reinvention and growth into a national operation. On the brand front, the company will continue to add "premium-quality" items to its menu along the lines of the recently introduced Pannidos and a new line of salads. Most Jack in the Box restaurants already accept credit cards, and the company also plans to "reimage" 50 restaurants in fiscal 2005, and 200 restaurants every year after that at a cost of about $100,000 per location.
The company also discussed growth plans for three other brands, including the JBX fast-casual concept, the Quick Stuff companion convenience store/gas station for several Jack in the Box locations, and the fast-growing Qdoba Mexican Grill stores. On this front, Jack in the Box expects to convert 10% to 15% of its Jack in the Box stores to the new JBX concept.
Jack in the Box also expects franchised stores to account for 35% of Jack in the Box/JBX operations within five years, up from about 22% today.
While making a concerted effort to improve its fortunes and make it to the big time, Jack in the Box remains a second-tier brand to the likes of McDonald's (NYSE: MCD), Yum! Brand's (NYSE: YUM) Taco Bell/KFC/Pizza Hut portfolio, Burger King, and Wendy's (NYSE: WEN). That said, Jack in the Box's second-tier nature is more than reflected in its stock price, at 12 times next year's earnings.
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Fool contributor Jeff Hwang owns none of the companies mentioned above.
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