Jack In The Box: With No Announcement, Qdoba Questions Persist

Jack in the Box Inc. JACK reported Wednesday its fiscal fourth quarter earnings report, which may call into question the price tag the company may receive in the future should it proceed with the sale of its Qdoba chain.

The Analyst

UBS analyst Dennis Geiger maintains a Neutral rating on Jack in the Box's stock with an unchanged $105 price target.

The Thesis

Jack reported a 1-percent decline in system-wide same-store sales, while an overall earnings miss could be attributed to Qdoba's poor sales, margins and impairments, Geiger said in a note. Adding to the negative sentiment is the fact that management offered no meaningful update as to the sale of Qdoba, which was recently reported to be in the late stages.

The company won't issue fiscal 2018 guidance until the completion of all strategic alternatives for Qdoba is completed, the analyst said. This would merely add to investor concerns given the heightened competitive environment in the restaurant industry. Nevertheless, Jack's stock at current levels may not fully reflect the value which can be unlocked through a sale of Qdoba, especially given the core Jack in the Box's progress towards a 95 percent franchise ownership profile.

Price Action

Shares of Jack in the Box were trading lower by more than 4.6 percent at $97.44 Thursday morning.

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