Foodmaker (Jack-in-the-Box Restaurants) Message Board

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Non-Tech : Foodmaker (Jack-in-the-Box Restaurants)

FM 27.19

0.0%

Jan 8 4:00 PM EST

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To: seminole who wrote (157)	8/5/1997 10:42:00 AM
From: David Kuspa	of 338

FM announces it will reduce long term debt by $50 million, using cash on hand and completing the transaction by this September. According to the company, this repayment of debt will reduce the company's annual interest expense by more than $4.6 million. Here's the link to the press release: biz.yahoo.com At 39.5 million shares outstanding, that's about $0.12/share per year in additional profits the company can hold on to, or $0.04/share per quarter. This is great news. The $400 million in long term debt on their balance sheet has probably soured some potential institutional investors from coming on board. In May '95, FM retired $43 million of their long term debt, helping to bring the company back to profitability that summer. This period marked the beginning of the stock's rise from the $4-$5 range. In November 95, FM was rewarded with an upgrade from S&P on their debt ratings. PE based on trailing earnings is now about 23 at the current stock price. The last quarter (which came in at $0.25/share) is typically their best seasonal quarter. However, if you factor in this additional income/share, I think you'll agree with me that $0.25/share or more per quarter is doable from here on out. Especially when you consider their expansion program. And if FM can earn $1.00+ in '98, that puts the forward-looking PE in the 16-18 range. There are still legs in this comeback for FM! $20/share, here we come. As always, do your own research! D. Kuspa

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