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What Drove Jack in the Box’s Earnings in 3Q16?

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Aug. 18 2020, Updated 6:28 a.m. ET

Earnings per share

So far in this series, we’ve discussed Jack in the Box’s (JACK) revenue, its sources of revenue, and its EBIT (earnings before interest and tax) margin. Now, let’s discuss Jack in the Box’s 3Q16 EPS (earnings per share). In fiscal 3Q16, the company posted adjusted EPS of $1.07, which represents growth of 33.3% from $0.8 in 3Q15.

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EPS growth

The growth in EPS was mainly driven by share repurchases in the last 12 months, and supported by revenue growth and an increase in EBIT margins. In the last 12 months, the company has purchased shares worth approximately $315 million, which decreased the shares outstanding by 12%. By the end of 3Q16, the company had $150 million still available under share repurchase program.

In the last five quarters, Jack in the Box has beaten analysts’ estimates four times. Whenever the company beats analysts’ estimates, the share price tends to rise.

Peer comparisons

In fiscal 3Q16, Restaurants Brand International (QSR) posted EPS growth of 160%, while Chipotle Mexican Grill’s (CMG) EPS declined by 80.5%. During the same period, Wendy’s (WEN) is expected to post EPS growth of 28.7%.

Outlook

Jack in the Box management has set the EPS guidance to range from $3.65 to $3.75. Analysts are expecting the company to post EPS of $0.9 in fiscal 4Q16. With EPS of $2.9 in the first three quarters, analysts are expecting the company to post EPS of $3.8 in fiscal 2016, which represents year-over-year growth of 27%. In the first three quarters of fiscal 2017, analysts are expecting the company to post EPS of $3.5, which represents growth of 38.9% compared to the corresponding quarters of the previous year.

Next, we will look at PE multiples of Jack in the Box.

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