Jack in the Box Looks Good in This Area of Growth



EPS growth

Now that we’ve discussed revenue growth and EBIT (earnings before interest and tax) margins, let’s analyze the EPS (earnings per share) growth of the five fast food companies in our review. In 2Q16, the five companies registered median EPS growth of 25%.

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The leaders

With EPS growth of 45.1%, Jack in the Box (JACK) outperformed other fast food restaurants in this metric. In 2Q16, JACK posted EPS of $1.13 compared to $0.78 in 2Q15. The growth in EPS was mainly driven by share repurchases in the last 12 months. Revenue growth and an increase in EBIT margins also supported JACK’s EPS growth. We’ll look at share repurchases of all the companies in our next article.

JACK, which forms 0.22% of the holdings of the iShares Core S&P Mid-Cap ETF (IJH), is followed by Restaurant Brands International (QSR) with 38.3% EPS growth. Expansion of EBIT margins and share repurchases have raised QSR’s EPS from $0.30 to $0.41. Wendy’s (WEN) posted EPS growth of 25%. Despite the decline of 21.8% in revenue, WEN posted EPS of $0.10 compared to $0.08 in 2Q15. The expansion in EBIT margins and share repurchases in the last 12 months boosted Wendy’s EPS.

The laggards

McDonald’s (MCD) posted EPS of $1.45, a growth of 15.1% from $1.26 in 2Q15. MCD’s EPS growth was the least among the five fast food companies. Sonic (SONC) posted EPS growth of 19.4%. Both MCD’s and SONC’s EPS were primarily driven by share repurchases and expansion of EBIT margins.

Next, we’ll look at these companies’ dividend policies.


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