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Jack In The Box (JACK - Free Report) is a Zacks Rank #5 (Strong Sell) that operates and franchises Jack in the Box quick-service restaurants. With over 2,200 restaurants, the company is one of the largest hamburger chains in the country.
After disappointing earnings, the stock traded below October lows towards the $65 level. More recently, JACK has rallied with the overall market, up 17% from December lows.
Investors might be getting ahead of themselves as the upcoming quarter is likely threatened by inflationary impacts on margins.
About the Company
JACK is headquartered in San Diego, Ca. The company was founded in 1951 and employs 22,000 people.
JACK is valued at $1.6 billion and has a Forward PE of 14. The stock holds Zacks Style Scores of “B” in Value and “A” in Momentum. The company pays a dividend of 2.3%.
Q4 Earnings
The company reported EPS on November 22nd, missing expectations by 1.4%. JACK reported Q4 at $1.33 v the $1.35 and revenues came in slightly better than expected. Jack In the Box saw year over year Same Store Sales growth of 4%, while Del Taco saw growth of 5.2%.
The company guided FY23 operating EPS of $5.25-5.62. The guidance was disappointing to investors and the stock was sold aggressively after the earnings report.
Estimates
Because of the light guidance, analysts are lowering estimates and dropping price targets.
Over the last 60 days, analyst estimates have been lowered across all time frames. For the current quarter, estimates have dropped from $2.02 to $1.72, or 14%. For the current year, they have fallen 17%, down to $5.48 from $6.60.
After earnings a handful of analysts took their price targets lower. UBS went from $85 to $77, Wedbush to $100 from $115 and Barclays went to $73 from $88.
Technical Take
After the rally in the stock over the last few weeks, JACK is finding resistance at the 200-day moving average. If the bulls fail to hold this area, the stock will likely drop back to the December trading range.
Earnings are due up in late February and investors should be cautious of more trouble with margins. We likely get sideway trading until then and after earnings the chart will tell us which direction the stock may go.
For now, over $80 looks bullish, but under $70 the bears are back in control.
Summary
Like many restaurants, the higher costs of food and labor is starting to eat into margins. For now, the fundamental story makes the stock an avoid. While the chart looks much better, the stock is at resistance, so investors should take caution at current levels.
For those interested in the restaurant space, a better option in the sector might be Shake Shack (SHAK - Free Report) . The stock is a Zacks Rank #2 (Buy) that just surged higher on better than expected Q1 revenue guidance.
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Bear of the Day: Jack In The Box (JACK)
Jack In The Box (JACK - Free Report) is a Zacks Rank #5 (Strong Sell) that operates and franchises Jack in the Box quick-service restaurants. With over 2,200 restaurants, the company is one of the largest hamburger chains in the country.
After disappointing earnings, the stock traded below October lows towards the $65 level. More recently, JACK has rallied with the overall market, up 17% from December lows.
Investors might be getting ahead of themselves as the upcoming quarter is likely threatened by inflationary impacts on margins.
About the Company
JACK is headquartered in San Diego, Ca. The company was founded in 1951 and employs 22,000 people.
JACK is valued at $1.6 billion and has a Forward PE of 14. The stock holds Zacks Style Scores of “B” in Value and “A” in Momentum. The company pays a dividend of 2.3%.
Q4 Earnings
The company reported EPS on November 22nd, missing expectations by 1.4%. JACK reported Q4 at $1.33 v the $1.35 and revenues came in slightly better than expected. Jack In the Box saw year over year Same Store Sales growth of 4%, while Del Taco saw growth of 5.2%.
The company guided FY23 operating EPS of $5.25-5.62. The guidance was disappointing to investors and the stock was sold aggressively after the earnings report.
Estimates
Because of the light guidance, analysts are lowering estimates and dropping price targets.
Over the last 60 days, analyst estimates have been lowered across all time frames. For the current quarter, estimates have dropped from $2.02 to $1.72, or 14%. For the current year, they have fallen 17%, down to $5.48 from $6.60.
After earnings a handful of analysts took their price targets lower. UBS went from $85 to $77, Wedbush to $100 from $115 and Barclays went to $73 from $88.
Technical Take
After the rally in the stock over the last few weeks, JACK is finding resistance at the 200-day moving average. If the bulls fail to hold this area, the stock will likely drop back to the December trading range.
Earnings are due up in late February and investors should be cautious of more trouble with margins. We likely get sideway trading until then and after earnings the chart will tell us which direction the stock may go.
For now, over $80 looks bullish, but under $70 the bears are back in control.
Summary
Like many restaurants, the higher costs of food and labor is starting to eat into margins. For now, the fundamental story makes the stock an avoid. While the chart looks much better, the stock is at resistance, so investors should take caution at current levels.
For those interested in the restaurant space, a better option in the sector might be Shake Shack (SHAK - Free Report) . The stock is a Zacks Rank #2 (Buy) that just surged higher on better than expected Q1 revenue guidance.