Jack in the Box Inc. (NASDAQ:JACK): Immense Growth Potential?

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After Jack in the Box Inc.’s (NASDAQ:JACK) earnings announcement in September 2018, analysts seem cautiously bearish, with earnings expected to grow by 1.3% in the upcoming year compared with the higher past 5-year average growth rate of 6.2%. Currently with trailing-twelve-month earnings of US$104m, we can expect this to reach US$106m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for Jack in the Box

What can we expect from Jack in the Box in the longer term?

The 16 analysts covering JACK view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of JACK’s earnings growth over these next few years.

NasdaqGS:JACK Past and Future Earnings, February 21st 2019
NasdaqGS:JACK Past and Future Earnings, February 21st 2019

By 2022, JACK’s earnings should reach US$117m, from current levels of US$104m, resulting in an annual growth rate of 3.6%. This leads to an EPS of $5.68 in the final year of projections relative to the current EPS of $3.66. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 12% to 12% by the end of 2022.

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 put together three important factors you should look at:

  1. 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.
  2. 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.
  3. 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!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.