Why Analysts Have Raised Their Estimated EBIT Margins and EPS for JACK


Jun. 27 2016, Updated 3:06 p.m. ET

EBIT margins

Analysts have revised their estimated EBIT (earnings before interest and tax) margins for next four quarters. Currently, they are expecting Jack in the Box (JACK) to post EBIT margins of 14.5%, 14.7%, 16.5%, and 17.6% in 3Q16, 4Q16, 1Q17, and 2Q17, respectively, as compared to earlier estimates of 14.3%, 14.7%, 15.8%, and 16% for the same respective periods.

The expectation of declines in commodity prices and the improvements in expenditure reduction strategies could have prompted analysts to raise their estimated EBIT margins for next four quarters for JACK.

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Earnings per share

Currently, analysts have estimated that JACK will post EPS (earnings per share) of $4 for next four quarters, which would represent a growth of 29.4% over the corresponding quarters of the previous year.

Previously, analysts forecasted that JACK’s EPS for next four quarters would be $3.8. The increase in revenue estimates and EBIT margins could have prompted analysts to raise their EPS estimates for next four quarters.

Peer comparisons

For next four quarters, analysts expect peers McDonald’s (MCD), Wendy’s Company (WEN), and Restaurant Brands International (QSR) to register EPS growth of 8%, -26.2%, and 44.2%, respectively.

Notably, JACK makes up 0.18% of the holdings of the PowerShares FTSE RAFI US 1500 Small-Mid Portfolio ETF (PRFZ).

Now let’s discuss valuation multiples.


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