Jack in the Box (NASDAQ: JACK) and Arcos Dorados (NYSE:ARCO) are both mid-cap retail/wholesale companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, earnings, valuation, profitability, dividends, institutional ownership and analyst recommendations.

Analyst Recommendations

This is a summary of recent ratings and price targets for Jack in the Box and Arcos Dorados, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Jack in the Box 0 5 8 0 2.62
Arcos Dorados 0 0 3 0 3.00

Jack in the Box currently has a consensus target price of $111.58, suggesting a potential upside of 11.38%. Arcos Dorados has a consensus target price of $10.87, suggesting a potential upside of 8.13%. Given Jack in the Box’s higher probable upside, equities research analysts plainly believe Jack in the Box is more favorable than Arcos Dorados.

Institutional & Insider Ownership

98.7% of Jack in the Box shares are held by institutional investors. Comparatively, 36.6% of Arcos Dorados shares are held by institutional investors. 2.1% of Jack in the Box shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Jack in the Box pays an annual dividend of $1.60 per share and has a dividend yield of 1.6%. Arcos Dorados does not pay a dividend. Jack in the Box pays out 36.4% of its earnings in the form of a dividend. Arcos Dorados has increased its dividend for 3 consecutive years.

Earnings & Valuation

This table compares Jack in the Box and Arcos Dorados’ 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 1.90 $135.33 million $4.40 22.77
Arcos Dorados $2.93 billion 0.72 $78.81 million $0.38 26.45

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

Profitability

This table compares Jack in the Box and Arcos Dorados’ 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%
Arcos Dorados 2.51% 20.04% 5.19%

Volatility & Risk

Jack in the Box has a beta of 0.51, suggesting that its share price is 49% less volatile than the S&P 500. Comparatively, Arcos Dorados has a beta of 2.05, suggesting that its share price is 105% more volatile than the S&P 500.

Summary

Jack in the Box beats Arcos Dorados on 11 of the 17 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 Arcos Dorados

Arcos Dorados Holdings Inc. is a McDonald’s franchisee. The Company operates or franchises over 2,140 McDonald’s-branded restaurants. It divides its operations into four geographical divisions: Brazil; the Caribbean division, consisting of Aruba, Colombia, Curacao, French Guiana, Guadeloupe, Martinique, Puerto Rico, Trinidad and Tobago, the United States Virgin Islands of Saint Croix and Saint Thomas, and Venezuela; the North Latin America division (NOLAD), consisting of Costa Rica, Mexico and Panama, and the South Latin America division (SLAD), consisting of Argentina, Chile, Ecuador, Peru and Uruguay. Its menus feature over three tiers of products: entry-level options, such as its Big Pleasures, Small Prices offerings and Almuerzos Colombianos (Colombian Lunches) in Colombia; core menu options, such as the Big Mac, Happy Meal and Quarter Pounder, and premium options, such as Big Tasty or Angus premium hamburgers and chicken sandwiches and low-calorie or low-sodium products.

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