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Why Have Analysts Raised Revenue Estimates for JACK for the Next Four Quarters?

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Jun. 24 2016, Published 4:06 p.m. ET

Revenue sources

Jack in the Box (JACK) earns its revenue from company-operated revenue sales, franchise fees, and royalties collected from franchisees. The company posted fiscal 2Q16 revenues of $361.2 million, with the Jack in the Box brand generating $264.1 million and the Qdoba brand generating $97.1 million.

The company-owned restaurants of both brands together generated more than 75% of the company’s total revenues.

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Revised estimates

Analysts have raised their revenue estimates for 1Q17 and 2Q17, while maintaining their estimates for 3Q16 and 4Q16. Overall, for next four quarters, they have raised their revenue estimates by 0.3% from earlier estimate of $1.609 billion to $1.615 billion.

The new estimates for next four quarters represent a revenue growth of 4.5% from the corresponding quarters of the previous year. Despite lowering their same-store sales growth estimates, analysts have hiked their revenue estimates due to unit growth. Currently, analysts are expecting JACK to add more units in 1Q17 and 2Q17 than they earlier predicted.

Peers comparisons

By comparison, peers McDonald’s (MCD), Wendy’s (WEN), and Restaurant Brands International (QSR) are expected to post a revenue growth of -4.4%, -28.8%, and 5.6%, respectively, in the next four quarters.

Notably, JACK makes up 0.23% of the holdings of the iShares S&P Mid-Cap 400 Growth ETF (IJK).

Next, we’ll discuss the changes in analysts’ same-store sales growth estimates.

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