Why It Makes Sense To Buy The Post-Earnings Dip In Jack In The Box

Oppenheimer’s Brian Bittner says he would Buy any near-term dip in the shares of Jack in the Box Inc. (NASDAQ: JACK) given “conservative” fiscal 2017 EPS outlook, "solid" sales trends and attractive valuation.

Quarter In Review

The restaurant operator’s adjusted fourth-quarter EPS of $1.03 beat Street's $0.88 estimate, with system-wide comps growing 2 percent (vs. Street's +1.9 percent). Qdoba comps rose 1.2 percent versus Street's +1.6 percent estimate.

The company sees 2017 EPS at $4.55–$4.75 (vs. Street's $4.75) and projects full-year comp growth at 2 – 3 percent versus Oppenheimer’s +2.6 percent estimate.

Bittner reiterated his Outperform rating and $115 price target.

Another Voice From The Street

Last month, Goldman Sachs’ Karen Holthouse stated that Taco Bell’s focus on entry level value and growing its breakfast business crates near-term risks for Jack in the Box as she launched coverage of the stock with a Sell rating and price target of $88.

At last check, shares of Jack in the Box rose 4.6 percent to $106.33 after falling to $97.52.

Image Credit: By Famartin (Own work) [CC BY-SA 4.0], via Wikimedia Commons