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How Investors Reacted to the Launch of JACK’s New Brunchfast Menu

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JACK’s new initiative

To counter McDonald’s (MCD) all-day breakfast promotion, Jack in the Box (JACK) launched its new all-day “brunchfast” menu on September 28, 2016

The menu features items such as the bacon and egg chicken sandwich, the brunch burger, and the southwest scrambler plate.

Speaking about the launch of the company’s new menu, Iwona Alter, vice president of product marketing of JACK, said, “Brunch enthusiasts no longer have to wait until the weekend to satisfy their brunch cravings. With Brunchfast, we’re giving our guests 24-7 access to the distinct, craveable flavors of brunch whenever they want it and wherever the hunger strikes.”

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Stock performance

The launch of this new menu failed to generate a positive response from investors as JACK’s stock price fell 2.1% on September 28 compared to the previous day’s closing price. Investors could have been worried about increased expenses putting pressure on JACK’s margins due to the launch of these new menu items.

On September 28, JACK was trading at $94.4, a year-to-date return of 25.7%. During the same period, peers The Wendy’s Company (WEN), McDonald’s, and Restaurant Brands International (QSR) returned -0.6%, -2.4%, and 23.9%, respectively. The broader comparative index, the Consumer Discretionary Select Sector SPDR ETF (XLY), returned 3.4% during the same period. XLY invests more than 10% of its holdings in restaurant companies.

Better-than-expected 2Q16 and 3Q16 results have led to rises in JACK’s share price. Also, the measures taken by the company to improve the quality of its products appears to have paid off.

About JACK

Founded in 1951, San Diego–based JACK operates the Jack in the Box brand and the Qdoba Mexican Eats brand.

Series overview

In this series, we’ll look at the changes in analysts’ estimates for JACK’s revenue and EPS (earnings per share) for the next four quarters. We’ll also look at JACK’s valuation multiple, analysts’ recent recommendations, and the company’s target price for the next 12 months.

Let’s start by looking at analysts’ revenue estimates for the next four quarters.

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