Jack in the Box Inc (JACK) Intrinsic Value Analysis

Executive Summary

As of June 9, 2025, Jack in the Box Inc's estimated intrinsic value ranges from $36.73 to $119.11 per share, depending on the valuation methodology applied.

Valuation Method	Fair Value (USD)	Implied Upside/Downside
Discounted Cash Flow (10Y)	$59.46	+193.0%
Discounted Cash Flow (5Y)	$36.73	+81.0%
Earnings Power Value	$119.11	+487.1%

Is Jack in the Box Inc (JACK) undervalued or overvalued?

With the current market price at $20.29, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Jack in the Box Inc's intrinsic value, including:

1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
2. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component	Low	High
Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.78	2.45
Cost of equity	12.0%	18.6%
Cost of debt	4.6%	6.1%
Tax rate	27.8%	29.4%
Debt/Equity ratio	4.53	4.53
After-tax WACC	4.9%	6.9%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

• Forecast Period: 5-year DCF and 10-year DCF
• Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
• Discount Rate: 5.9% (range: 0.0% - 9.3%)

Key Projections:

• Revenue growth from $1,571 (FY09-2024) to $3,156 (FY09-2034)
• Net profit margin expansion from -2% to 0%
• Capital expenditures maintained at approximately 4% of revenue

DCF Model	Fair Value	Enterprise Value	% from Terminal Value
5-Year Growth	$37	$2,394M	84.5%
10-Year Growth	$59	$2,823M	72.0%
5-Year EBITDA	$(1,234)	$1,393M	73.3%
10-Year EBITDA	$7	$1,829M	56.8%

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component	Value
Normalized Earnings	$227M
Discount Rate (WACC)	6.9% - 4.9%
Enterprise Value	$3,298M - $4,602M
Net Debt	$1,701M
Equity Value	$1,597M - $2,901M
Outstanding Shares	19M
Fair Value	$85 - $154
Selected Fair Value	$119.11

Key Financial Metrics

Metric	Value
Market Capitalization	$383M
Enterprise Value	$2084M
Trailing P/E	0.00
Forward P/E	0.00
Trailing EV/EBITDA	7.00
Current Dividend Yield	872.39%
Dividend Growth Rate (5Y)	5.43%
Debt-to-Equity Ratio	4.53

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method	Weight	Weighted Value
Discounted Cash Flow (10Y)	46%	$17.84
Discounted Cash Flow (5Y)	38%	$9.18
Earnings Power Value	15%	$11.91
Weighted Average	100%	$59.89

Investment Conclusion

Based on our comprehensive valuation analysis, Jack in the Box Inc's weighted average intrinsic value is $59.89, which is approximately 195.2% above the current market price of $20.29.

Key investment considerations:

• Strong projected earnings growth (-2% to 0% margin)
• Consistent cash flow generation
• Historical dividend growth of 5.43%

Given these factors, we believe Jack in the Box Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.