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Jack in the Box in Fiscal 1Q17: Can Earnings Boost Its Stock?

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JACK’s stock performance

Based in San Diego, Jack in the Box (JACK) operates the Jack in the Box fast food chain and Qdoba Mexican Eats, a Mexican-style fast casual restaurant chain. The company is set to announce its fiscal 1Q17 results on February 22, 2017, after the market closes.

In 4Q16, JACK had better-than-expected earnings. Its initiatives to improve the quality of its menu items and the initial performance of its Brunchfast menu, launched in September 2016, appear to have increased investor confidence. As a result, JACK stock rose.

As of February 16, 2017, JACK stock was trading at $109.13, which represents a rise of 7.5% since the announcement of its fiscal 4Q16 earnings on November 21, 2016.

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Year-to-date performance

It was a tough year in 2016 for restaurants due to higher labor wages and the gap between the rising cost of eating out and the falling prices at grocery stores. In spite of these factors, JACK rose 48.7% in 2016.

The company has had a strong performance in the last three quarters. Donald Trump’s presidential victory could also have something to do with JACK’s rising stock price. Investors expect Trump to loosen regulations, which could benefit restaurant chains.

However, since the beginning of 2017, the stock has fallen 2.1%. During the same period, its peers Wendy’s (WEN), McDonald’s (MCD), and Restaurant Brands International (QSR) have risen 1.3%, 4.1%, and 13.0%, respectively.

Year-to-date, the SPDR S&P 500 ETF (SPY) (SPX) has risen 5.0%. SPY has invested in restaurant companies such as McDonald’s (MCD) and Starbucks (SBUX).

Series overview

In this series, we’ll explore what investors can expect from JACK’s fiscal 1Q17 earnings release. We’ll also look at analysts’ revenue and EPS estimates. Finally, we’ll take a look at the company’s valuation multiples and expected stock price over the next 12 months.

Let’s start by looking at JACK’s fiscal 1Q17 revenue estimates.

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