What Wall Street Insiders Think About Jack In The Box

Shares of Fast-Food chain, Jack in the Box Inc. JACK, shot up almost 7 percent in trading on Wednesday, February 18 following the company’s first quarter earnings results announced the prior day. In fact, Jack in the Box shares have increased more than 60 percent over the last year.

Highlights from the report include Non-GAAP earnings of $0.93 a share and $468.6 million in revenue, marking a 24 percent increase and a 4.1 percent increase year-over-year, respectively.

Lenny Comma, chairman and chief executive officer of Jack in the Box, said, “We had a great first quarter, with a 24 percent increase in operating earnings per share resulting from better than expected same-store sales growth at both Jack in the Box® and Qdoba Mexican Grill®, margin expansion and a 10 percent reduction in our diluted share count as we continued to use our growing free cash flow to return cash to shareholders.”

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Because of its strong results, Jack in the Box increased its 2015 guidance to operating earnings of $2.85 to $2.97 a share, compared to $2.45 a share in fiscal 2014.

Jack in the Box can largely attribute its impressive quarter to strong sales from its subsidiary, Qdoba Mexican Grill. Qdoba’s revenue rose 13 percent at company-operated stores and 14 percent including franchises. Jack in the Box believes the boost in sales at Qdoba is due to simplified menu pricing and less discounting.

Jack in the Box also believes that changing its marketing strategy, adding more menu items with bold flavors, allowing customers to order any product, including breakfast, regardless of time of day and adding a late-night menu were all large drivers in sales growth for the first quarter of 2015.

Wunderlich analyst Robert Derrington weighed in on Jack in the Box on February 18 following the company’s Q1 earnings results, reiterating a Buy rating on the stock with a $100 price target. Derrington believes Jack in the Box’s Q1 earnings results were “much better than expected” and shows a “strong start” to 2015. Derrington noted his confidence in management, stating “Based on these much better than projected early FY15 results, both our $100 PT and prior EPS estimates are under review, with a positive bias.”

Robert Derrington has rated Jack in the Box 11 times since November 2009, earning a 100 percent success rate recommending the company and a +33.6 percent average return per recommendation. Overall, Derrington has an 86 percent success rate recommending stocks and a +21.3 percent average return per recommendation.

Similarly on February 18, Oppenheimer analyst Brian Bittner maintained an Outperform rating on Jack in the Box with a $99 price target. Bittner observed, “As strengthening fundamentals now replace JACK’s financial-engineering story, we remain bullish and raise our price target to $99 from $83. Comp trends at both concepts are, in our view astonishing, and accompanied margin leverage may lead to further earnings upside in ’15.”

Brian Bittner has rated Jack in the Box 16 times since May 2012, earning a 100 percent success rate recommending the stock and a +43.3 percent average return per recommendation. Overall, Bittner has an 87 percent success rate recommending stocks and a +22.5 percent average return per recommendation.

However, not all analysts were quick to recommend buying the fast-food chain’s stock. For example, Barclay’s analyst Jeffrey Bernstein reiterated an Equal-Weight rating on the stock with a $90 price target on February 18. Despite his Equal-Weight rating, the analyst still believes Jack in the Box is positioned for growth in both the quick-service restaurant and fast-casual space.

Jeffrey Bernstein has given Jack in the Box 8 neutral ratings since August 2012 with no success rate and no average return. Overall, Bernstein has a 73 percent success rate recommending stocks and a +9.3 average return per recommendation.

On average, the top analyst consensus for Jack in the Box on TipRanks is Moderate Buy.