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How Jack in the Box Stock Reacted to Upgrade from Goldman Sachs

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Stock performance

Goldman Sachs’s upgrade of Jack in the Box (JACK) appears to have increased investor confidence, leading to a rise in the company’s stock price. As of January 19, 2018, Jack in the Box was trading at $94.99, a rise of 1.9% from its previous day’s closing price.

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Year-to-date performance

2017 was a tough year for Jack in the Box, as its stock price declined by 12.1%. Further, year-to-date, the company’s stock price has fallen by 3.2%. In comparison, McDonald’s (MCD), Wendy’s (WEN), and Restaurant Brands International (QSR) have returned 2.3%, 1.8%, and 0.2%, year-to-date, respectively. The S&P 500 Index (SPX) and the Consumer Discretionary Select Sector SPDR Fund (XLY) have returned 5.1% and 7.0%, respectively.

Analyst estimates

Analysts expect Jack in the Box to post revenue of $851.9 million, a fall of 45.2% from $1.6 billion in the corresponding four quarters of the previous year. The sale of Qdoba Mexican Eats and the refranchising of company-owned restaurants are expected to lower the company’s revenue. However, during the same period, the company’s EPS (earnings per share) is expected to rise 5.7%.

Valuation multiple

As of January 19, 2018, Jack in the Box was trading at a forward PE (price-to-earnings) multiple of 19.8x. On the same day, McDonald’s (MCD), Wendy’s (WEN), and Restaurant Brands International (QSR) were trading at forward PE multiples of 24.5x, 29.6x, and 23.5x, respectively.

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