What Should Investors Know About The Future Of Jack in the Box Inc’s (NASDAQ:JACK)?
Based on Jack in the Box Inc’s (NASDAQ:JACK) earnings update in July 2018, analyst forecasts seem pessimistic, with profits predicted to drop by -7.5% next year relative to the past 5-year average growth rate of 8.6%. Currently with a railing-twelve-month profit of US$127.1m, the consensus growth rate suggests that earnings will drop to US$117.5m by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
View our latest analysis for Jack in the Box
How is Jack in the Box going to perform in the near future?
Over the next three years, it seems the consensus view of the 16 analysts covering JACK is skewed towards the negative sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of JACK’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of -2.9% based on the most recent earnings level of US$138.3m to the final forecast of US$126.6m by 2021. However, if we exclude extraordinary items from earnings, we see that the profits is predicted to rise over time, resulting in an EPS of $5.53 in the final year of forecast compared to the current $4.52 EPS today. The bottom-line decline seems to be caused by revenue declining at an average annual rate of -2.5%. With margins currently sitting at 8.9%, this fall in revenues is expected to cause margin expansion to 13.8% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Jack in the Box, I’ve compiled three key aspects you should further research:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is Jack in the Box worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Jack in the Box is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Jack in the Box? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
