Jollibee Stock Review: To Buy Or Not To Buy? | The Investing Engineer PH

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Jollibee Stock Review: To Buy Or Not To Buy?

jollibee stock review

I always wanted to do a valuation of Jollibee (JFC) because their Chickenjoy and Jolly Spaghetti is so delicious.

But what about its stock? Is it mouth-watering too? If you look at the charts, JFC is bearish right now.

The question is, is it the right time to buy now? I see a lot of investors asking this question. So let's take out our calculators and let the numbers speak for themselves.

UPDATE: This is an old and very limited analysis I did when I was just starting out. A comprehensive analysis I did can be found here.

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5-Year Historical Earnings Per Share And Financial Figure Chart

jollibee stock review
jollibee stock review

We can see that JFC had good EPS and financials for the past 5 years. They were able to maintain consistent growth on their revenues, net income, retained earnings and total inventory. Their cash & short-term investments took a slight dip but overall, they're good to go.

Income Statement Ratio Chart

jollibee stock review

I noticed that JFC's gross profit margin threads below the minimum of 20% and this suggests that the company is under fierce competition. It's no wonder because a lot of fast food startups are entering the market nowadays so it makes sense. But with that values, JFC would need to find ways to stay competitive in the food industry.

Their SG&A is quite high too almost doubling the 30% recommended valuation. Adding to that, the net income to total revenue is under 10% suggesting a fiercely competitive industry.

With that said, JFC is in a fiercely competitive industry based on its income statement.

What about the balance sheet? Does it agree with the income statement figures? 

Let's find out.

Balance Sheet Ratio Chart

jollibee stock review

The percentages derived here tells us the exact same message of the income statement. The only good thing I see here is the current ratio which averages above 100% and the ROE which is nearly 20%.

The net income to total assets percentage is quite low too. The total receivables to gross profit is just right the expected percentage but it would be better if it is much lower.

In general, we can conclude that JFC is in a fiercely competitive industry based on the company's balance sheets.

The net income to capital expenditures from 2010 to 2014 was computed at 74%. JFC spent a lot of capital for expansion. And they also bought back their stocks which is a very good indicator of a company's growth.

What about its financial health? Not to worry. JFC's did a lot of saving for the rainy day. Their 5-yr cash and retained earnings are superb and their debts are low.

Initial Rate Of Return

Now let's find out if the stock is undervalued or not;

Pre-tax EPS = Net Income before taxes (in millions) / Outstanding shares (in millions)

Pre-tax EPS = 6609 / 1069 = 6.18

JFC's closing price as of August 11, 2015 is 191.20 Php. The rate of return is;

%RoR = (Pre-tax EPS / Stock price) x 100

%RoR = (6.18/191.20) x 100 = 3.23%

The 5-yr Gov't bond yield today is 3.852%. So in comparison, JFC's predicted yield is almost the same as a gov't bond yield. In theory, this is quite low and we may safely say that JFC is overvalued in terms of its rate of return.

Final Thoughts

This is the reason why I think purchasing shares of JFC is not a good idea as of now. If I have the money to spend now, I'll find other companies that have better valuations. JFC's stock is experiencing a market correction right now so maybe we can still wait a little bit longer to make the price more attractive.

 Happy investing!
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  • reynaldo says:

    hi.
    i would like to buy a share in jollibee. is my php300,000 able to buy a share? if so, how?
    thanks.

    • Hi Reynaldo,

      Yes you can buy JFC shares. With that capital, you can buy 1,457 shares at yesterday’s price of Php 205.80/sh.

      To do that, you have to open a stockbroker account and from there, you can start to buy. I recommend COL Financial for that.

      • Erwin says:

        Good day sir.. i just want to ask if how much is the starting amount that can invest in stock market of jfc?. Thank you

  • Reizo says:

    Thanks for the analysis. Just as I thought. JFC is currently overvalued. With current PEG ratio of around 2.8++. Not worth buying as of now for value investors.

  • Erwin says:

    Hi good day.. may ask if how much is the starting amount can i invest in jfc? Thank you.

  • bella says:

    hi there.i just wanna ask,if i’m going to buy 10 shares for JFC where will i’m going to send the money?and is it a one time payment only for the ten shares or i have to give 2000 every month?i was just confused,i hope you can help me understand with this buying a stock..thank you so much?

  • bella says:

    hi there.i just wanna ask,if i’m going to buy 10 shares for JFC where will i’m going to send the money?and is it a one time payment only for the ten shares or i have to give 2000 every month?i was just confused,i hope you can help me understand with this buying a stock..thank you so much!

  • Food industry is really competitive. Good evaluation of JFC.

  • Lex says:

    Saan po pinakamaganda mag invest? 🙂 Any recommendation? 🙂

    • Hi Lex, hanap ka ng stocks na undervalued. I’m not in the business of stock recommendations. There are services like Pinoyinvestor where you can get fundamental and technical analysis… baka makatulong yan sa’yo.

      However, you can browse my posts baka meron ka makita. Just do your own due diligence na lang.

      Happy investing Lex!

  • emilee says:

    How to open account to buy stocks in JFC?

  • Ramesh Thakur says:

    I also want to know some tips about trading. I am beginner and I don’t know anything about it.

  • Grace Paragoso says:

    hello po sir, I plan buying shares to JFC, my question po ay my bayad po bah every month yung stockbroker?

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