Financial Analysis: Jack in the Box (JACK) versus Popeyes Louisiana Kitchen (PLKI)

Jack in the Box (NASDAQ: JACK) and Popeyes Louisiana Kitchen (NASDAQ:PLKI) are both retail/wholesale companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, analyst recommendations, institutional ownership and earnings.

Analyst Ratings

This is a summary of recent recommendations and price targets for Jack in the Box and Popeyes Louisiana Kitchen, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Jack in the Box 0 6 9 0 2.60
Popeyes Louisiana Kitchen 1 4 1 0 2.00

Jack in the Box presently has a consensus target price of $111.83, suggesting a potential upside of 36.55%. Popeyes Louisiana Kitchen has a consensus target price of $69.00, suggesting a potential downside of 12.66%. Given Jack in the Box’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Jack in the Box is more favorable than Popeyes Louisiana Kitchen.

Profitability

This table compares Jack in the Box and Popeyes Louisiana Kitchen’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Jack in the Box 8.71% -30.55% 9.64%
Popeyes Louisiana Kitchen 15.08% 490.51% 15.48%

Earnings and Valuation

This table compares Jack in the Box and Popeyes Louisiana Kitchen’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Jack in the Box $1.55 billion 1.56 $135.33 million $4.40 18.61
Popeyes Louisiana Kitchen N/A N/A N/A $1.98 39.90

Jack in the Box has higher revenue and earnings than Popeyes Louisiana Kitchen. Jack in the Box is trading at a lower price-to-earnings ratio than Popeyes Louisiana Kitchen, indicating that it is currently the more affordable of the two stocks.

Dividends

Jack in the Box pays an annual dividend of $1.60 per share and has a dividend yield of 2.0%. Popeyes Louisiana Kitchen does not pay a dividend. Jack in the Box pays out 36.4% of its earnings in the form of a dividend.

Insider and Institutional Ownership

99.5% of Jack in the Box shares are held by institutional investors. Comparatively, 97.6% of Popeyes Louisiana Kitchen shares are held by institutional investors. 2.6% of Jack in the Box shares are held by company insiders. Comparatively, 2.2% of Popeyes Louisiana Kitchen shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility & Risk

Jack in the Box has a beta of 0.42, suggesting that its stock price is 58% less volatile than the S&P 500. Comparatively, Popeyes Louisiana Kitchen has a beta of 0.24, suggesting that its stock price is 76% less volatile than the S&P 500.

Summary

Jack in the Box beats Popeyes Louisiana Kitchen on 9 of the 14 factors compared between the two stocks.

About Jack in the Box

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.

About Popeyes Louisiana Kitchen

Popeyes Louisiana Kitchen, Inc. (Popeyes) develops, operates and franchises quick-service restaurants (QSRs) under the trade names Popeyes Louisiana Kitchen and Popeyes Chicken & Biscuits. The Company conducts its operations through two segments: franchise operations and Company-operated restaurants. The Company-operated restaurant segment includes the operation of Company-owned restaurants. The franchise operations segment consists of domestic and international franchising activities. The Company’s Louisiana style menu features spicy chicken, chicken tenders, fried shrimp and other seafood, red beans and rice, and other regional items. As of December 25, 2016, the Company operated and franchised 2,688 Popeyes restaurants in 48 states, the District of Columbia, three territories and 25 foreign countries. As of December 25, 2016, of the 55 Company-operated restaurants, approximately 84% were concentrated in Louisiana, North Carolina and Tennessee.

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