What: Shares of Jack in the Box Inc. (NASDAQ:JACK) rose 26.1% in the month of May, according to data provided by S&P Global Market Intelligence, driven by a combination of the fast-food restaurant chain's strong fiscal second-quarter 2016 results and an encouraging 2016 analyst day.
So what: More specifically, shares climbed more than 14% on May 12 after Jack in the Box announced quarterly revenue climbed a modest 0.8% year over year, to $361.2 million, including flat same-store sales at its core Jack in the Box system locations, and 2.1% same-store sales growth from its wholly owned Qdoba subsidiary. With the help of the company's healthy margins and cost control initiatives, that translated to 24.7% growth in net earnings, to $28.7 million, and -- thanks in part to aggressive share repurchases over the past year -- 40% growth in adjusted net income per share, to $0.84. Analysts, on average, were anticipating adjusted earnings of just $0.70 per share.
Then shares continued their climb on May 25, 2016, following Jack in the Box's 2016 investor and analyst meeting, during which the company revealed plans to increase the percentage of its restaurants owned by franchisees from around 82% today to a range of 90% to 95% over the next several years. In doing so, Jack in Box believes it can drive growth in operating earnings per share in the mid-teens, at least 25% returns on invested capital from operations (up from 15.5% last year), and earnings before interest, taxes, depreciation, and amortization (EBTIDA) of at least $400 million (up from $290 million last year) through the 2018 to 2020 time frame.
Now what: As it stands after last month's rally, shares of Jack in the Box trade almost exactly where they stood one year ago, having rebounded from a particularly painful report in February as the chain suffered under the competitive weight of McDonald's (NYSE:MCD) successful all-day breakfast campaign. So while I'm personally content watching its progress from the sidelines for at least another quarter in these early stages of its strategic plan, I won't be the least bit surprised if Jack in the Box stock continues to rise from here.