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Jack in the Box (JACK) Outruns Industry, Rises 18% YTD
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Jack in the Box Inc. (JACK - Free Report) is benefiting from robust comps growth, menu innovation and strong digitalization. The company is also witnessing improvement in margin. Consequently, the company’s shares have gained 18.3% year to date compared with the industry’s increase of 5.7%. We believe that there is still momentum left in this Zacks Rank #2 (Buy) stock. This is because the company has an expected long-term earnings growth rate of 17% and a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here. Let’s delve deeper.
Growth Drivers
The company is benefiting from solid performance of Tiny Tacos, Jumbo breakfast platter (including French Toast Sticks), bacon cheeseburger and chicken strips. Also, the company’s newly-launched clock chicken sandwich and improved chicken strips witnessed positive response in markets. Meanwhile, it is shifting focus to travel-indulgent food that offers great overall value. Thus, increased focus on food packaging and portability is likely to enhance customer experience in the upcoming periods.
Despite the coronavirus pandemic, the company impressed investors with robust comps. Comps at Jack in the Box’s stores increased 7.5% in the fiscal first quarter compared with 2.9% growth in the prior-year quarter. The upside can be attributed to average check growth of 21.2%. However, transactions declined 13.7% in the quarter. Same-store sales at franchised stores increased 13% compared with 1.6% growth in the prior-year quarter. Meanwhile, system-wide same-store sales increased 12.5% compared with 1.7% growth in the year-ago quarter.
Jack in the Box, which shares space with Restaurant Brands International Inc. (QSR - Free Report) , is also benefiting from partnership with DoorDash, Postmates, Grubhub and Uber Eats. Meanwhile, Jack in the Box plans to invest in drive-thrus as those derive more than 70% of total sales. Further, the implementation of digital menu board and menu board canopies is part of the company’s developmental plans.
Restaurant-level adjusted margin, an important financial metric that gives an indication about the company’s health, expanded 70 basis points (bps) in the fiscal first quarter from the year-ago quarter’s 24.8%. The upside was backed by improvements in food and packaging costs. Notably, food and packaging costs (as a percentage of company restaurant sales) declined 150 bps owing to menu price increases and positive mix shift. However, this was partially offset by higher ingredient costs.
Other Key Picks
Other stocks, which warrant a look in the same space include Darden Restaurants, Inc. (DRI - Free Report) and Chuy's Holdings, Inc. (CHUY - Free Report) , each carrying a Zacks Rank #2 (Buy).
Darden 2021 earnings are expected to rise 24.9%.
Chuy's Holdings has a trailing four-quarter earnings surprise of 126.5%, on average.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
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Jack in the Box (JACK) Outruns Industry, Rises 18% YTD
Jack in the Box Inc. (JACK - Free Report) is benefiting from robust comps growth, menu innovation and strong digitalization. The company is also witnessing improvement in margin. Consequently, the company’s shares have gained 18.3% year to date compared with the industry’s increase of 5.7%. We believe that there is still momentum left in this Zacks Rank #2 (Buy) stock. This is because the company has an expected long-term earnings growth rate of 17% and a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here. Let’s delve deeper.
Growth Drivers
The company is benefiting from solid performance of Tiny Tacos, Jumbo breakfast platter (including French Toast Sticks), bacon cheeseburger and chicken strips. Also, the company’s newly-launched clock chicken sandwich and improved chicken strips witnessed positive response in markets. Meanwhile, it is shifting focus to travel-indulgent food that offers great overall value. Thus, increased focus on food packaging and portability is likely to enhance customer experience in the upcoming periods.
Despite the coronavirus pandemic, the company impressed investors with robust comps. Comps at Jack in the Box’s stores increased 7.5% in the fiscal first quarter compared with 2.9% growth in the prior-year quarter. The upside can be attributed to average check growth of 21.2%. However, transactions declined 13.7% in the quarter. Same-store sales at franchised stores increased 13% compared with 1.6% growth in the prior-year quarter. Meanwhile, system-wide same-store sales increased 12.5% compared with 1.7% growth in the year-ago quarter.
Jack in the Box, which shares space with Restaurant Brands International Inc. (QSR - Free Report) , is also benefiting from partnership with DoorDash, Postmates, Grubhub and Uber Eats. Meanwhile, Jack in the Box plans to invest in drive-thrus as those derive more than 70% of total sales. Further, the implementation of digital menu board and menu board canopies is part of the company’s developmental plans.
Restaurant-level adjusted margin, an important financial metric that gives an indication about the company’s health, expanded 70 basis points (bps) in the fiscal first quarter from the year-ago quarter’s 24.8%. The upside was backed by improvements in food and packaging costs. Notably, food and packaging costs (as a percentage of company restaurant sales) declined 150 bps owing to menu price increases and positive mix shift. However, this was partially offset by higher ingredient costs.
Other Key Picks
Other stocks, which warrant a look in the same space include Darden Restaurants, Inc. (DRI - Free Report) and Chuy's Holdings, Inc. (CHUY - Free Report) , each carrying a Zacks Rank #2 (Buy).
Darden 2021 earnings are expected to rise 24.9%.
Chuy's Holdings has a trailing four-quarter earnings surprise of 126.5%, on average.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Click here for the 4 trades >>