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Evaluating Jack in the Box’s Revenue and Income Rise in 4Q15

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Price movement of Jack in the Box

Jack in the Box (JACK) has a market cap of $2.6 billion. Its YTD (year-to-date) price movement was a mix of rises and falls in fiscal 2015. After the 4Q15 earnings report, JACK fell by 0.72% to close at $69.99 per share as of November 17, 2015. The price movements on weekly, monthly, and YTD bases are -4.8%, -11.3%, and -11.7%, respectively.

Technically, the stock has broken the support and is trading below all moving day averages. Currently, JACK is trading 6.5% below its 20-day moving average, 8.3% below its 50-day moving average, and 19.1% below its 200-day moving average.

The PowerShares Dynamic Leisure & Entertainment ETF (PEJ) invests 2.3% of its holdings in Jack in the Box. The ETF tracks a multifactor, tiered equal-weighted index of US entertainment and leisure industry stocks. The YTD price movement of PEJ is 4.1% as of November 16, 2015.

The competitors of Jack in the Box (JACK) and their market caps are listed below:

  • Yum! Brands (YUM) – $30.2 billion
  • Chipotle Mexican Grill (CMG) – $18.2 billion
  • Wendy’s (WEN) – $2.6 billion
  • Sonic (SONC) – $1.3 billion
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Jack in the Box’s performance in fiscal 4Q15 and fiscal 2015

Jack in the Box reported 4Q15 total revenue of $354.1 million, a rise of 2.7% when compared to its total revenue of $344.7 million in 4Q14. Revenue from company restaurant sales, franchise rental revenues, and franchise royalties rose by 2.1%, 4.6%, and 5.0%, respectively, in 4Q15 compared to 4Q14.

Company restaurant sales for Jack in the Box fell by 0.28%, and company restaurant sales of Qdoba rose by 7.4% in 4Q15 compared to the prior year period. Company restaurant costs as a percentage of revenue fell by 3.3%, and operating income rose by 42.8% in 4Q15 compared to the prior year period.

Jack in the Box’s net income and EPS (earnings per share) rose to $23.1 million and $0.63, respectively, in 4Q15, compared to $16.2 million and $0.40, respectively, in 4Q14. The company declared a quarterly cash dividend of $0.30 per share on its common stock. The company launched its new Portobello Mushroom Buttery Jack in the quarter.

The company has authorized an additional $200 million stock buyback program in fiscal 2016, which will expire in November 2017. In fiscal 2015, it repurchased ~3,743,000 shares at an average price of $84.71 per share, for an aggregate cost of $317.1 million, including $65.5 million in fiscal 4Q15. This completed a $100 million stock buyback program authorized in May 2015.

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Fiscal 2015 results

In fiscal 2015, Jack in the Box (JACK) reported total revenue of $1,540.3 million, a rise of 3.8% YoY (year-over-year). Revenue from company restaurant sales, franchise rental revenues, and franchise royalties rose by 3.2%, 4.4%, and 7.4%, respectively, in fiscal 2015.

The number of Jack in the Box’s company restaurants fell by 4.2%, and franchises rose by 0.93%. The number of Qdoba’s company and franchise restaurants rose by 3.9% and 3.4%, respectively, in fiscal 2015.

Jack in the Box’s operating income rose by 21.5% over the same period. Its net income and EPS rose to $108.8 million and $2.85, respectively, in fiscal 2015, compared to $89.0 million and $2.12, respectively, in fiscal 2014.

Meanwhile, Jack in the Box’s cash and cash equivalents rose by 67.0%, and its accounts receivables fell by 4.0% in fiscal 2015. The company’s current ratio fell to 0.64 in fiscal 2015 compared to its current ratio of 0.71 in fiscal 2014.

The company has projected the following numbers for fiscal 2016:

  • ~20 new Jack in the Box restaurants and ~50-60 new Qdoba restaurants
  • diluted EPS from continuing operations on a GAAP (generally accepted accounting principles) basis, excluding restricting charges and gains or losses from franchising, of $3.55–$3.70 compared to operating EPS of $3 in fiscal 2015.

About Jack in the Box

Jack in the Box is a restaurant company that offers hamburgers, specialty sandwiches, salads, real ice cream shakes, tacos, chicken nuggets, and chicken sandwiches.

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