Motley Fool Hidden Gems Pay Dirt pick Jack in the Box
What analysts say:
- Buy, sell, or waffle? Ten analysts follow Jack. Five are bullish on the stock, and five others have hold ratings. The Motley Fool CAPS community has given Jack in the Box a three-star rating (out of five stars).
- Revenue. Analysts project $685.9 million in third-quarter sales for mediocre 3.8% year-over-year growth.
- Earnings. Analysts expect quarterly earnings of $0.43, or 7.5% above the $0.40 reported in last year's quarter.
What management says:
Back in March, when Jack in the Box released first-quarter results, management said to expect second-quarter same-store sales growth of 1% to 2% (compared with a 6.4% increase in the year-ago quarter) at namesake stores and 3% to 5% comps growth at Qdoba. At the time, management also projected full-year earnings of $1.98 to $2.08. Also, the company rolled out several new products in the second quarter, including the Sirloin Steak Melt and the Cherry Chip Bliss ice cream shake, so we'll get a glimpse of the initial results from them.
What management does:
Margins have decreased over the past couple of quarters, given the macro challenges. However, management has been selling company-owned stores to franchisees, which should help improve margins. Furthermore, the company has been using the excess capital to repurchase shares, which will additionally benefit existing shareholders.
11/06 |
01/07 |
04/07 |
07/07 |
09/07 |
01/08 |
|
---|---|---|---|---|---|---|
Gross |
16.2% |
16.6% |
16.7% |
16.6% |
16.5% |
16.1% |
Operating |
5.3% |
5.8% |
6.2% |
6.4% |
6.3% |
6.1% |
Net |
4% |
4.3% |
4.5% |
4.7% |
4.4% |
4.3% |
One Fool says:
Jack in the Box, Sonic
As seen with Sonic, management expects a drop in same-store sales for the rest of the year as rising food and energy prices take a toll on consumers. I wouldn't be surprised to see Jack in the Box announce lower-than-expected comps. But to a contrarian, disappointing results could send the stock price lower, which could present an even more appealing buy-in price for a company with favorable prospects over the long haul.
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