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Inside JACK’s Strong Fiscal 2Q16 Results and Share Price Reaction

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Performance

Jack in the Box (JACK) announced its fiscal 2Q16 results on May 11, 2016, after the market closed. The company operates the Jack in the Box brand, a fast-food restaurant chain, and Qdoba Mexican Eats, a Mexican-style fast casual restaurant chain. JACK reported fiscal 2Q16 revenue of $361.2 million and adjusted EPS of $0.90. Compared to 2Q15, revenue rose by 0.8%, and EPS grew by 25.5%.

Inside JACK's Strong Fiscal 2Q16 Results and Share Price Reaction

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Market response

Analysts had estimated that JACK’s fiscal 2Q16 revenue would be $360.3 million and that its EPS would be $0.7. The better-than-expected results drove JACK’s share price up by 15.2% to end May 12 at $75. However, YTD (year-to-date) JACK’s share price was still trading at a discount of 2.2% due to disappointing 4Q15 results.

Since the beginning of 2016, the share prices of JACK’s peers, such as McDonald’s (MCD), Wendy’s (WEN), and Restaurant Brands International (QSR) have returned 10.2%, -3%, and 2%, respectively. During the same period, the share price of the broader comparative index, the Guggenheim S&P 500 Pure Growth ETF (RPG) fell by 12.8%. RPG has invested 44% of its holdings in travel and restaurant companies.

Series overview

In this series, we’ll discuss JACK’s 2Q16 performance. We’ll compare it with the company’s performance during the same quarter last year. We’ll also explore the factors that could drive JACK’s revenue in the coming quarters. Finally, we’ll look at the company’s valuation multiple and analyst estimates and recommendations.

But first, let’s discuss JACK’s 2Q16 revenue.

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