Beats Street estimates Jack in The Box Inc. (Nasdaq: Jack) has reported Q2FY17 GAPP EPS of $0.98 and revenues of $369 million beating street estimates of $0.90 and $368.8 million respectively. The company reported quarter earnings of $33.1 million. EPS from continuing operation was $1.09.  Restructuring charges of $2.2 million or $0.04 per diluted share were recorded during the reported quarter. Jack-In-Box same store decreases 0.8% for the quarter. JACK stock rose over 7.8% this morning (as of  10:31AM EDT; Source: Google finance) The management mentioned that the company is making good progress on refranchising initiative with the sale of 60 restaurants in the second quarter. Additionally, the company has signed non-binding letters of intent with franchisees to sell approx. 70 additional restaurants. The company repurchased around 2.23 million of shares of common stock. The company expects capital expenditure of approx. $100 million. Qdoba concern In 2003, the company acquired Qdoba for $45 million for all in cash deal, which has helped Jack to increase its geographic presence, and top-line revenue was also growing. However, in recent quarters, it the company found Qdoba was more of a drag than delight as same-store sales on an annual basis were choppy. The chain has posted 6% and 9.3% growth in 2014 and 2015 respectively but did not fare well in 2016 with meager 1.4%  same-store sales growth. In February 2017, Jack reported same-store sales growth of 3.2% while Qdoba declined 1.4%. In Q2FY17, Qdoba reported a decline of  3.2% as against expectation of 2.% drop and 2.1% gain in corresponding gain. The management said that they have become more apparent since then that the overall valuation of the company is being impacted by having two different business models, As a result, the company has retained Morgan Stanley & Co. LLC to assist the board in its evaluation of potential alternatives with respect to Qdoba as well as other was to enhance shareholder value. Future guidance The management expects Q3FY17  same store sales to move up or down 1% while full year same store sales increased of ~1%.  For full year, the company expects EPS in the range of $4.10 – $4.30 per share. Jack expects impairment and other charges as percentage of revenus of approx. 70 basis points excluding  restructure charges. Market rating The stock has consensus “Strong Buy” rating with consensus target price of $120 per share. The stock is currently trading at dividiend yield of 1.61% and one year forward P/E of 23.38x.

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