Intrinsic value of Jack In The Box Inc. - JACK

Previous Close

$77.19

  Intrinsic Value

$4.55

stock screener

  Rating & Target

str. sell

-94%

Previous close

$77.19

 
Intrinsic value

$4.55

 
Up/down potential

-94%

 
Rating

str. sell

We calculate the intrinsic value of JACK stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  887
  908
  931
  957
  986
  1,018
  1,053
  1,090
  1,131
  1,174
  1,221
  1,270
  1,323
  1,379
  1,439
  1,502
  1,568
  1,639
  1,713
  1,792
  1,875
  1,963
  2,055
  2,152
  2,255
  2,363
  2,476
  2,596
  2,722
  2,854
Variable operating expenses, $m
  690
  705
  722
  742
  763
  786
  811
  839
  868
  900
  892
  928
  967
  1,008
  1,051
  1,097
  1,146
  1,198
  1,252
  1,310
  1,370
  1,434
  1,502
  1,573
  1,648
  1,727
  1,810
  1,897
  1,989
  2,085
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  690
  705
  722
  742
  763
  786
  811
  839
  868
  900
  892
  928
  967
  1,008
  1,051
  1,097
  1,146
  1,198
  1,252
  1,310
  1,370
  1,434
  1,502
  1,573
  1,648
  1,727
  1,810
  1,897
  1,989
  2,085
Operating income, $m
  197
  202
  209
  216
  224
  232
  242
  252
  263
  274
  329
  342
  356
  371
  387
  404
  422
  441
  461
  483
  505
  529
  553
  580
  607
  636
  667
  699
  733
  768
EBITDA, $m
  297
  304
  311
  320
  330
  341
  352
  365
  378
  393
  408
  425
  443
  461
  481
  502
  525
  548
  573
  600
  627
  657
  687
  720
  754
  790
  828
  868
  910
  955
Interest expense (income), $m
  43
  58
  22
  23
  24
  25
  27
  28
  30
  31
  33
  35
  37
  40
  42
  45
  47
  50
  53
  57
  60
  64
  68
  72
  76
  80
  85
  90
  95
  101
  106
Earnings before tax, $m
  139
  180
  186
  192
  198
  205
  213
  222
  231
  241
  293
  305
  316
  329
  343
  357
  372
  388
  405
  422
  441
  461
  482
  504
  527
  551
  577
  604
  632
  662
Tax expense, $m
  38
  49
  50
  52
  54
  55
  58
  60
  62
  65
  79
  82
  85
  89
  93
  96
  100
  105
  109
  114
  119
  124
  130
  136
  142
  149
  156
  163
  171
  179
Net income, $m
  102
  132
  136
  140
  145
  150
  156
  162
  169
  176
  214
  222
  231
  240
  250
  260
  271
  283
  295
  308
  322
  337
  352
  368
  385
  402
  421
  441
  461
  483

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  840
  859
  881
  906
  933
  963
  996
  1,032
  1,070
  1,111
  1,155
  1,202
  1,252
  1,305
  1,361
  1,421
  1,484
  1,550
  1,621
  1,696
  1,774
  1,857
  1,944
  2,036
  2,133
  2,235
  2,343
  2,456
  2,575
  2,700
Adjusted assets (=assets-cash), $m
  840
  859
  881
  906
  933
  963
  996
  1,032
  1,070
  1,111
  1,155
  1,202
  1,252
  1,305
  1,361
  1,421
  1,484
  1,550
  1,621
  1,696
  1,774
  1,857
  1,944
  2,036
  2,133
  2,235
  2,343
  2,456
  2,575
  2,700
Revenue / Adjusted assets
  1.056
  1.057
  1.057
  1.056
  1.057
  1.057
  1.057
  1.056
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
  1.057
Average production assets, $m
  486
  497
  510
  525
  541
  558
  577
  598
  620
  643
  669
  696
  725
  756
  788
  823
  859
  898
  939
  982
  1,028
  1,076
  1,126
  1,180
  1,236
  1,295
  1,357
  1,423
  1,491
  1,564
Working capital, $m
  -61
  -63
  -64
  -66
  -68
  -70
  -73
  -75
  -78
  -81
  -84
  -88
  -91
  -95
  -99
  -104
  -108
  -113
  -118
  -124
  -129
  -135
  -142
  -149
  -156
  -163
  -171
  -179
  -188
  -197
Total debt, $m
  410
  428
  447
  470
  495
  522
  551
  583
  618
  654
  694
  736
  781
  829
  880
  933
  990
  1,050
  1,114
  1,181
  1,251
  1,326
  1,405
  1,487
  1,575
  1,667
  1,763
  1,865
  1,972
  2,085
Total liabilities, $m
  756
  773
  793
  815
  840
  867
  896
  928
  963
  1,000
  1,039
  1,082
  1,126
  1,174
  1,225
  1,279
  1,335
  1,395
  1,459
  1,526
  1,597
  1,671
  1,750
  1,833
  1,920
  2,012
  2,109
  2,210
  2,317
  2,430
Total equity, $m
  84
  86
  88
  91
  93
  96
  100
  103
  107
  111
  115
  120
  125
  130
  136
  142
  148
  155
  162
  170
  177
  186
  194
  204
  213
  224
  234
  246
  257
  270
Total liabilities and equity, $m
  840
  859
  881
  906
  933
  963
  996
  1,031
  1,070
  1,111
  1,154
  1,202
  1,251
  1,304
  1,361
  1,421
  1,483
  1,550
  1,621
  1,696
  1,774
  1,857
  1,944
  2,037
  2,133
  2,236
  2,343
  2,456
  2,574
  2,700
Debt-to-equity ratio
  4.890
  4.980
  5.080
  5.190
  5.300
  5.420
  5.530
  5.650
  5.770
  5.890
  6.010
  6.130
  6.240
  6.350
  6.460
  6.570
  6.670
  6.770
  6.870
  6.960
  7.050
  7.140
  7.220
  7.300
  7.380
  7.460
  7.530
  7.590
  7.660
  7.720
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  102
  132
  136
  140
  145
  150
  156
  162
  169
  176
  214
  222
  231
  240
  250
  260
  271
  283
  295
  308
  322
  337
  352
  368
  385
  402
  421
  441
  461
  483
Depreciation, amort., depletion, $m
  100
  101
  103
  104
  106
  108
  111
  113
  116
  119
  80
  83
  86
  90
  94
  98
  102
  107
  112
  117
  122
  128
  134
  140
  147
  154
  162
  169
  178
  186
Funds from operations, $m
  201
  233
  238
  244
  251
  258
  266
  275
  284
  294
  294
  305
  317
  330
  344
  358
  374
  390
  407
  425
  444
  465
  486
  508
  532
  557
  583
  610
  639
  669
Change in working capital, $m
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
Cash from operations, $m
  203
  234
  240
  246
  253
  261
  269
  278
  287
  297
  297
  309
  321
  334
  348
  363
  378
  395
  412
  431
  450
  471
  492
  515
  539
  564
  590
  618
  648
  679
Maintenance CAPEX, $m
  -57
  -58
  -59
  -61
  -62
  -64
  -66
  -69
  -71
  -74
  -77
  -80
  -83
  -86
  -90
  -94
  -98
  -102
  -107
  -112
  -117
  -122
  -128
  -134
  -140
  -147
  -154
  -162
  -169
  -178
New CAPEX, $m
  -9
  -11
  -13
  -14
  -16
  -17
  -19
  -21
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -53
  -56
  -59
  -62
  -65
  -69
  -72
Cash from investing activities, $m
  -66
  -69
  -72
  -75
  -78
  -81
  -85
  -90
  -93
  -98
  -102
  -107
  -112
  -117
  -123
  -129
  -135
  -141
  -148
  -155
  -163
  -170
  -179
  -187
  -196
  -206
  -216
  -227
  -238
  -250
Free cash flow, $m
  137
  165
  168
  171
  175
  179
  183
  188
  194
  200
  195
  202
  209
  217
  225
  234
  244
  254
  265
  276
  288
  300
  314
  327
  342
  358
  374
  391
  409
  429
Issuance/(repayment) of debt, $m
  -660
  17
  20
  22
  25
  27
  30
  32
  34
  37
  40
  42
  45
  48
  51
  54
  57
  60
  63
  67
  71
  75
  79
  83
  87
  92
  97
  102
  107
  113
Issuance/(repurchase) of shares, $m
  574
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -86
  17
  20
  22
  25
  27
  30
  32
  34
  37
  40
  42
  45
  48
  51
  54
  57
  60
  63
  67
  71
  75
  79
  83
  87
  92
  97
  102
  107
  113
Total cash flow (excl. dividends), $m
  51
  183
  188
  193
  199
  206
  213
  220
  228
  237
  234
  244
  254
  265
  276
  288
  301
  314
  328
  343
  358
  375
  392
  410
  429
  450
  471
  493
  517
  541
Retained Cash Flow (-), $m
  -676
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -624
  181
  186
  191
  197
  203
  210
  217
  225
  233
  230
  239
  249
  260
  271
  282
  294
  307
  321
  335
  351
  367
  383
  401
  420
  439
  460
  482
  505
  529
Discount rate, %
  14.40
  15.12
  15.88
  16.67
  17.50
  18.38
  19.30
  20.26
  21.28
  22.34
  23.46
  24.63
  25.86
  27.15
  28.51
  29.94
  31.43
  33.01
  34.66
  36.39
  38.21
  40.12
  42.12
  44.23
  46.44
  48.76
  51.20
  53.76
  56.45
  59.27
PV of cash for distribution, $m
  -546
  136
  119
  103
  88
  74
  61
  50
  40
  31
  23
  17
  13
  9
  6
  4
  3
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
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Current shareholders' claim on cash, %
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  50.0
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  50.0

Jack in the Box Inc. operates and franchises Jack in the Box quick-service restaurants (QSRs) and Qdoba Mexican Eats (Qdoba) fast-casual restaurants. The Company operates in two segments: Jack in the Box and Qdoba restaurant operations. Qdoba is a fast-casual Mexican food brand in the United States, offering food items including burritos, tacos, salads, and quesadillas. Jack in the Box is a hamburger chain, which offers a selection of products, including classic burgers such as, Jumbo Jack burgers, and new product lines, such as Buttery Jack burgers, and its Brunchfast menu. As of October 2, 2016, the Company operated 2,954 Jack in the Box QSRs and Qdoba fast-casual restaurants. As of October 2, 2016, Jack in the Box system included 2,255restaurants, of which 417 were company-operated and 1,838 were franchise operated. As of October 2, 2016, the Qdoba system included 699 restaurants, of which 367 were company operated and 332 were franchise operated.

FINANCIAL RATIOS  of  Jack In The Box Inc. (JACK)

Valuation Ratios
P/E Ratio 16.8
Price to Sales 1.5
Price to Book -5.9
Price to Tangible Book
Price to Cash Flow 13.2
Price to Free Cash Flow 22.9
Growth Rates
Sales Growth Rate -2.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -31.1%
Cap. Spend. - 3 Yr. Gr. Rate 3%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity -278.6%
Total Debt to Equity -295.1%
Interest Coverage 6
Management Effectiveness
Return On Assets 12.6%
Ret/ On Assets - 3 Yr. Avg. 10.9%
Return On Total Capital 17.6%
Ret/ On T. Cap. - 3 Yr. Avg. 16.2%
Return On Equity -44.6%
Return On Equity - 3 Yr. Avg. -29.5%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 55.3%
Gross Margin - 3 Yr. Avg. 55.3%
EBITDA Margin 22.7%
EBITDA Margin - 3 Yr. Avg. 20.4%
Operating Margin 17.1%
Oper. Margin - 3 Yr. Avg. 14.8%
Pre-Tax Margin 14.2%
Pre-Tax Margin - 3 Yr. Avg. 12.7%
Net Profit Margin 8.7%
Net Profit Margin - 3 Yr. Avg. 7.8%
Effective Tax Rate 37.3%
Eff/ Tax Rate - 3 Yr. Avg. 36.8%
Payout Ratio 36.3%

JACK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JACK stock intrinsic value calculation we used $870 million for the last fiscal year's total revenue generated by Jack In The Box Inc.. The default revenue input number comes from 0001 income statement of Jack In The Box Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our JACK stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 14.4%, whose default value for JACK is calculated based on our internal credit rating of Jack In The Box Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Jack In The Box Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of JACK stock the variable cost ratio is equal to 77.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for JACK stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Jack In The Box Inc..

Corporate tax rate of 27% is the nominal tax rate for Jack In The Box Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the JACK stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for JACK are equal to 54.8%.

Life of production assets of 8.4 years is the average useful life of capital assets used in Jack In The Box Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for JACK is equal to -6.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $-591.699 million for Jack In The Box Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 25.770 million for Jack In The Box Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Jack In The Box Inc. at the current share price and the inputted number of shares is $2.0 billion.

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