What's Next for Jack in the Box Stock as Earnings Loom?

What stock traders need to know about JACK ahead of Nov 18 earnings

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Jack in the Box Inc. (NASDAQ:JACK) is a popular American fast-food restaurant chain company was founded in San Diego, but has since expanded its locations to 21 additional U.S. states. Jack in the Box is due to report on its third quarter earnings after the close on November 18. JACK is only up 6% year-to-date, but has more than quadrupled off its 52-week low of $16.81 on --you guessed it -- March 18. 

The shares' recovery culminated in an annual high of $$91.52 on Nov. 9. A short squeeze could help JACK clear this new hurdle. Short interest has begun to taper off, yet the 2.98 million shares sold short accounts for a healthy 13.5% of the stock's total available float. At the equity's average pace of trading, it would take almost six days for shorts to buy back their bearish bets.

Jack in the Box has beat earnings expectations on only one of its four most recent earnings reports. Looking back to 2019, Jack in the Box missed third quarter expectations by $0.01. Expectations were once again missed when Jack in the Box reported on the fourth quarter of 2019.This time, the company swung and missed by a bigger margin of $0.21 per share.

When reporting on the first quarter of 2020, Jack in the Box reported a drop in EPS down to $0.50, while missing expectations (for the third time in a row) by $0.16. Most recently, in the company's second quarter report this year, Jack in the Box beat its earnings target by 33%. Jack in the Box reported an EPS of $1.37 instead of the expected EPS of $1.03. As for the company's upcoming earnings report slated for next week, Jack in the Box is expected to announce an EPS of $1.13.

Jack in the Box stock has a forward dividend of $1.60 and a dividend yield of 1.96%. The last dividend it paid was for $0.40 per share. The company started paying dividends in 2014. It has since raised its dividend twice, both time by $0.10.

Based on just our fundamental analysis, JACK is waving nothing but red flags for investors. The company's earnings history is one clear sign of inconsistency in growth. A look into the Jack in the Box's reported revenue and net income over the past few years reveals a similar theme of unpredictability. The company's balance sheet is possibly Jack in the Box’s weakest point. This is a major issue when combined with the fact that the company has continuously struggled to achieve consistent revenue growth.  


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