NEW YORK (
-- Jack In The Box
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
Highlights from the ratings report include:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 61.5% when compared to the same quarter one year ago, falling from $17.68 million to $6.80 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, JACK IN THE BOX INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- JACK, with its decline in revenue, slightly underperformed the industry average of 0.9%. Since the same quarter one year prior, revenues slightly dropped by 4.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has significantly increased by 131.74% to $36.04 million when compared to the same quarter last year. In addition, JACK IN THE BOX INC has also vastly surpassed the industry average cash flow growth rate of -7.06%.
Jack in the Box Inc. operates as a restaurant company that operates and franchises Jack in the Box restaurants. These restaurants are hamburger chains, with approximately 2,200 restaurants in 18 states. The company has a P/E ratio of 14.1, equal to the average leisure industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Jack In The Box has a market cap of $1 billion and is part of the
industry. Shares are down 0.2% year to date as of the close of trading on Thursday.
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