Should You Investigate Jack in the Box Inc. (NASDAQ:JACK) At US$63.79?

Jack in the Box Inc. (NASDAQ:JACK), is not the largest company out there, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$99.41 and falling to the lows of US$63.34. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Jack in the Box's current trading price of US$63.79 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Jack in the Box’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Jack in the Box

Is Jack in the Box Still Cheap?

Jack in the Box appears to be overvalued by 33% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$63.79 on the market compared to my intrinsic value of $47.91. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that Jack in the Box’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Jack in the Box look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 2.5% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Jack in the Box, at least in the short term.

What This Means For You

Are you a shareholder? JACK’s future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe JACK should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on JACK for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Jack in the Box at this point in time. To that end, you should learn about the 3 warning signs we've spotted with Jack in the Box (including 2 which are a bit concerning).

If you are no longer interested in Jack in the Box, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.