Qdoba Sale Boosts Jack in the Box’s Stock



Stock performance

Compared to the Jack in the Box brand, Qdoba’s SSSG (same-store sales growth) has been on the lower side in recent quarters and has been a drag on Jack in the Box’s (JACK) top line. Also, the company’s valuation multiple was negatively impacted by having two business models. So, the announcement of the deal appears to have increased investors’ confidence, leading to a rise in the company’s stock price. As of December 19, 2017, Jack in the Box was trading at $103.45, which represents a rise of 3.1% from the previous day’s closing price.

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Year-to-date performance

2017 has been a tough year for Jack in the Box. The company’s stock price has fallen 7.3% since the beginning of the year. During the same period, peers McDonald’s (MCD), Wendy’s (WEN), and Restaurant Brands International (QSR) have returned 42.4%, 21.3%, and 27.8%, respectively.

The Consumer Discretionary Select Sector SPDR Fund (XLY) and the S&P 500 Index (SPX) have returned 21.3% and 19.8%, respectively.

Valuation multiple

Valuation multiples help investors compare companies. For our analysis, we have considered the forward PE (price-to-earnings) multiple due to the high visibility in Jack in the Box’s earnings. As of December 19, 2017, Jack in the Box was trading at a forward PE multiple of 21.5x. On the same day, peers McDonald’s, Wendy’s, and QSR were trading at 24.9x, 30.6x, and 23.7x, respectively.

Next, we will look at analysts’ recommendations for Jack in the Box.


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