NEW YORK ( TheStreet) -- Jack In The Box (Nasdaq: JACK) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels, good cash flow from operations, notable return on equity and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 460.7% when compared to the same quarter one year prior, rising from $4.04 million to $22.65 million.
- Net operating cash flow has significantly increased by 99.56% to $32.24 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 10.67%.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, JACK IN THE BOX INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- JACK IN THE BOX INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, JACK IN THE BOX INC increased its bottom line by earning $1.61 versus $1.26 in the prior year. For the next year, the market is expecting a contraction of 4.3% in earnings ($1.54 versus $1.61).