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Wall Street Remains Optimistic for Jack in the Box

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Updated

Shares close lower

Jack in the Box (JACK) reported its earnings on May 13, 2015, after the market closed. The next day, shares began trading at $92.79, up 1% from the previous day’s close of $91.80. The day’s high and low were $93.24 and $86.41, respectively.

Share volume was ~2.5 million shares compared to the 90-day average daily volume of ~0.6 million shares. Jack in the Box closed 4.3% down at $87.82 from the previous day’s close, according to NASDAQ.

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Investors seem spooked by lower same-store sales growth at the company’s fast-growing concept Qdoba. In 2Q15, same-store sales came in at 8.3%, compared to 14% in 1Q15. Given the muted unit growth strategy, investors are watching the same-store sales movement closely.

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Upgrades and downgrades

On May 14, 2015, Morgan Stanley maintained its “neutral” rating for Jack in the Box with a price target of $93. This was unchanged from its previous target.

Jefferies also maintained its previous “buy” recommendation with a price target of $107.

As of April 14, seven Wall Street analysts had a “buy” rating, eight had a “hold” rating, and none had a “sell” rating for Jack in the Box. The consensus target price was $102.

2Q15 estimates

Following are Wall Street’s consensus estimates for Jack in the Box in 3Q15:

  • Adjusted earnings per share estimates are $0.72.
  • Revenue estimates are $356 million.
  • Estimates for operating profits are $50 million, which would give an operating margin of 14%.
  • Adjusted net income estimates are $28 million.
  • 3Q15 earnings will likely be announced on August 5, 2015.

Yum! Brands (YUM), which operates Pizza Hut, saw its stock increase by 3%. Chipotle Mexican Grill (CMG), which reported its earnings on April 21, saw its share price decline by 6%. YUM and CMG make up 1.5% and 1% of the Consumer Discretionary Select Sector SPDR Fund (XLY), respectively. XLY also has a 3% portfolio interest in Starbucks (SBUX).

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