Will Jack in the Box's Growth Outpace McDonald's and Wendy's?

Jack in the Box (NASDAQ: JACK  ) will release its quarterly report on Monday, and the fast-food restaurant operator has seen its stock soar to all-time highs over the past month. But in a highly competitive industry where McDonald's (NYSE: MCD  ) and Wendy's (NASDAQ: WEN  ) have much more extensive networks of locations, can Jack in the Box really keep up and grow its store count to become a bigger threat to its major rivals?

Image source copyright Jack in the Box. All rights reserved.

Jack in the Box doesn't have a high profile in the investing community, but its stock has actually performed quite well over the long run, outpacing both Wendy's and McDonald's over the past five years, and even matching up well against McDonald's impressive returns since the late 1990s. Both in its namesake restaurants, and with its Qdoba Mexican Grill chain, the company has moved beyond its original emphasis on burgers to encompass a broader array of food, matching menus against its rivals well. But can Jack in the Box continue to grow? Let's take an early look at what's been happening with Jack in the Box over the past quarter, and what we're likely to see in its report.

Stats on Jack in the Box

Analyst EPS Estimate

$0.39

Change From Year-Ago EPS

(9.3%)

Revenue Estimate

$336.28 million

Change From Year-Ago Revenue

(6%)

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

A pause that refreshes for Jack in the Box earnings?
In recent months, analysts have had mixed views on Jack in the Box earnings, reducing their September-quarter estimates by $0.01 per share, but boosting their full-year fiscal 2014 projections by 1%. The stock has kept climbing, with an 8% rise since mid-August.

Jack in the Box has done a particularly impressive job in growing when you consider that it has almost no international presence. By contrast, McDonald's has become a worldwide phenomenon, and although that has left it vulnerable to adverse events like the recent Chinese avian-flu scare, the fast-food giant couldn't have grown as big as it has without its global push. Wendy's has made big advances by actually becoming smaller, discarding less-profitable restaurants to focus on its core brand. Instead, Jack in the Box has focused on transforming its company-owned stores to franchise locations, cutting overhead costs even as it causes revenue to drop.

Much of Jack in the Box's growth has come from its Qdoba line, which has gone from having fewer than 100 restaurants a decade ago to more than 550 now. Yet, with intense competition from Chipotle Mexican Grill in the Mexican-food space, the company said that it will have to close 67 existing Qdoba locations. With other up-and-coming Mexican restaurants, Qdoba might no longer be the growth driver it was over the past 10 years.

Regardless, Jack in the Box has outpaced its peers in key growth measures, with comps of 3.9% for Qdoba, and 4.9% for its namesake restaurants over the first nine months of the year. McDonald's has seen much slower growth in global comps during most of 2013, while Wendy's has projected just 2% growth for 2013 at its company-owned locations.

In the Jack in the Box earnings report, watch to see if the company does more to retrench, or proceeds with its growth plans. Given the stock's big run, investors will need to see decisive action from incoming CEO Leonard Comma, who's slated to take over the CEO role from current chief executive Linda Lang at the beginning of 2014. Otherwise, Jack in the Box could start to give back some of its momentum to McDonald's and Wendy's.

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