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Jack in the Box: Stock Outperforms Peers’ over Last Five Years

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Peer comparison: Five-year stock performance

Having discussed Jack in the Box’s (JACK) fundamentals and valuation multiples, we can now look at returns.

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Jack in the Box’s stock performance

If you had invested $100 on December 18, 2011, in Jack in the Box, it would have become $351.10 by December 20, 2015, a CAGR (compound annual growth rate) of 28.6%. The company delivered a strong result in the first three quarters of 2015, beating market expectations. The company’s same-store sales growth, operating margins, and EPS (earnings per share) improved in the last two years, which has driven its stock prices up.

However, in 4Q15, the company failed to meet market expectations. Campaigns to increase the minimum wages for restaurant employees to $15 and a reduction in tourists visiting the United States due to the strengthening of the dollar contributed to the underperformance of Jack in the Box’s share prices in the last six months. Jack in the Box’s share price has fallen from its peak of $99.10 in March 2015 to $75.40, a decrease of 24%.

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Peer comparison: Stock performance

Over that last five years, McDonald’s (MCD), The Wendy’s Company (WEN), Chipotle Mexican Grill (CMG), and Panera Bread (PNRA) would have delivered CAGRs of 8.6%, 8.5%, 18%, and 13.1%, respectively. Jack in the Box’s stock has outperformed its peers’ in the last five years.

Jack in the Box’s EPS

Jack in the Box’s EPS grew from $1.61 to $2.95, an increase of 83.2% in five years. The shares repurchased in the last five years could have impacted the EPS growth rate. Under the share repurchase program, the company repurchased 23.6 million shares over five years.

Although improving same-store sales, operating margins, net margins, and EPS are positive signs for the company, its increased debt and net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio are worrying.

You can get exposure to Jack in the Box (JACK) stock by investing in the Direxion All Cap Insider Sentiment ETF (KNOW), which has invested 1.4% of its portfolio in Jack in the Box.

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