Will Jack in the Box Meet 1Q16 Estimates for Strong Growth?
Capital allocation policy
In fiscal 2015, Jack in the Box has returned over $350 million to its shareholders through share repurchases and dividends. The company has repurchased approximately 3.7 million shares at the aggregate cost of $317 million, which translates into an average price of $84.71 per share.
The buyback has resulted in a net decrease of outstanding shares by 9%. Also, the company’s board of members has further authorized an additional $200 million in share repurchase in fiscal 2016 and 2017.
Dividends
JACK had announced a dividend of $0.3 per share for 4Q15 to be paid in December 2015. Total cash dividends for fiscal 2015 were $1.1 per share. For fiscal 2016, quarterly dividends will total $1.3.
Dividend coverage
Dividend coverage is calculated by dividing the company’s cash flows by its dividends. The ratio measures the ability of the organization to pay dividends. A higher ratio is generally a healthier sign. A ratio of over three indicates the company has sufficient funds to pay its dividends while a ratio of less than one indicates the company’s cash flows are lower than its dividends paid, and the current levels of dividends are not sustainable over the long term. JACK’s dividend coverage ratio for 4Q14 was 3.76x.
Dividend yield
JACK’s 4Q15 dividend yield was 1.4%. Wall Street’s consensus estimate for the next 12 months stands at 1.5%. You can also gain exposure to Jack in the Box (JACK) by investing in the iShares S&P Mid-Cap 400 Growth ETF (IJK), which has invested 0.23% of its portfolio in JACK. IJK has also invested 0.89% in Domino’s Pizza (DPZ), 0.4% in Buffalo Wild Wings (BWLD), and 0.3% in Wendy’s Company (WEN).
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