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Here's Why You Should Retain Jack in the Box (JACK) Stock
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Jack in the Box Inc. (JACK - Free Report) is likely to benefit from digital initiatives, expansion efforts and reimaging program. Also, its focus on Del Taco Restaurants’ business bodes well. However, commodity inflation is a concern.
Let us discuss the factors that highlight why investors should retain the stock for the time being.
Growth Catalysts
Jack in the Box is focused on its digital platforms for enhancing overall guest experiences and customer satisfaction. In second-quarter fiscal 2023, the company zeroed in on two POS providers, which will be finalized by the fiscal third quarter. The POS rollout will assist in driving down cost of the system. Also, it emphasized on technological investments covering applications, software and tools (like digital menu boards), AI and personalized in-store ordering. The company announced the roll out of InMoment Spotlight, an advanced AI analytics software. The initiative focuses on improving the omnichannel guest experience with quality products and services.
The company focuses on repairing its franchisee relationship, mapping markets and rebuilding its store pipeline to drive growth. As of second-quarter fiscal 2023, the company was awarded 76 development agreements to open 335 new restaurants, of which 27 have already opened and 308 are in the pipeline for future development. The company also announced the addition of Montana and Wyoming markets and Florida and Arkansas. Given the substantial progress in terms of the franchise development program, the company anticipates achieving a long-term net unit growth goal of 4% by 2025. Also, it expects to have Jack in the Box restaurants in 40 states by 2030.
The emphasis on the reimaging program bodes well. In second-quarter fiscal 2023, the company stated that there are currently 405 reimaged forms submitted by franchise owners, of which 71 are in the design and permitting stage. In terms of recent remodel performance, the company reported a 14% increase in average net sales from pre- to post-remodel in fiscal first-quarter 2023. With solid participation from its franchisees, the company anticipates the program to be a driving factor of sales in the upcoming periods.
Jack in the Box emphasizes on the Del Taco Restaurants acquisition to drive growth. During second-quarter fiscal 2023, same-store sales rose 3.2%, comprising franchise same-store sales growth of 2.8% and company-operated same-store sales growth of 3.5%. During the quarter, the company reported three franchise openings with no company-owned closure. Subsequent to the quarter, the company also refranchised 17 Del Taco restaurants in Las Vegas to an existing Del Taco franchisee. This included development agreements for 10 new Del Taco restaurants to be built in Las Vegas, Wyoming and Montana.
Given the unit-expansion efforts coupled with an emphasis on the Del Yeah! Rewards program, the company anticipates the initiatives to better target guests and drive average spend and frequency in the upcoming periods.
Image Source: Zacks Investment Research
In the past three months, shares of Jack in the Box have gained 10.6% compared with the industry’s 3.3% growth.
Concerns
The company is persistently shouldering higher expenses, which have been detrimental to margins. During the fiscal second quarter, the company reported a rise in commodity inflation, advertising cost, wage inflation and higher utilities and maintenance and repair costs. In the second quarter of fiscal 2023, the company witnessed a 4.8% wage inflation and a 7.7% commodity inflation. Commodity costs grew due to a rise in price in nearly all categories, except pork and beef. The maximum impact was seen in sauces, potatoes, beverages and bakery. The company stated concerns about a challenging inflationary environment in 2023. For fiscal 2023, the company expects commodity cost inflation to be up 7-9% compared with fiscal 2022.
Zacks Rank & Key Picks
Jack in the Box currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Retail-Wholesale sector include:
Chuy's Holdings, Inc. (CHUY - Free Report) sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 23.4%, on average. Shares of CHUY have skyrocketed 97.1% in the past year. You can see the complete list of today’s Zacks Rank #1 stocks here.
The Zacks Consensus Estimate for Chuy’s Holdings’ 2023 sales and EPS suggests growth of 9.9% and 27%, respectively, from the year-ago period’s levels.
BJ's Restaurants, Inc. (BJRI - Free Report) sports a Zacks Rank #1. BJRI has a long-term earnings growth rate of 15%. The stock has improved 44% in the past year.
The Zacks Consensus Estimate for BJ's Restaurants’ 2023 sales and EPS suggests growth of 5.5% and 311.8%, respectively, from the year-ago period’s levels.
Arcos Dorados Holdings Inc. (ARCO - Free Report) carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth rate of 9.5%. The stock has rallied 48.3% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2023 sales and EPS suggests growth of 13.4% and 4.4%, respectively, from the year-ago period’s levels.
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Here's Why You Should Retain Jack in the Box (JACK) Stock
Jack in the Box Inc. (JACK - Free Report) is likely to benefit from digital initiatives, expansion efforts and reimaging program. Also, its focus on Del Taco Restaurants’ business bodes well. However, commodity inflation is a concern.
Let us discuss the factors that highlight why investors should retain the stock for the time being.
Growth Catalysts
Jack in the Box is focused on its digital platforms for enhancing overall guest experiences and customer satisfaction. In second-quarter fiscal 2023, the company zeroed in on two POS providers, which will be finalized by the fiscal third quarter. The POS rollout will assist in driving down cost of the system. Also, it emphasized on technological investments covering applications, software and tools (like digital menu boards), AI and personalized in-store ordering. The company announced the roll out of InMoment Spotlight, an advanced AI analytics software. The initiative focuses on improving the omnichannel guest experience with quality products and services.
The company focuses on repairing its franchisee relationship, mapping markets and rebuilding its store pipeline to drive growth. As of second-quarter fiscal 2023, the company was awarded 76 development agreements to open 335 new restaurants, of which 27 have already opened and 308 are in the pipeline for future development. The company also announced the addition of Montana and Wyoming markets and Florida and Arkansas. Given the substantial progress in terms of the franchise development program, the company anticipates achieving a long-term net unit growth goal of 4% by 2025. Also, it expects to have Jack in the Box restaurants in 40 states by 2030.
The emphasis on the reimaging program bodes well. In second-quarter fiscal 2023, the company stated that there are currently 405 reimaged forms submitted by franchise owners, of which 71 are in the design and permitting stage. In terms of recent remodel performance, the company reported a 14% increase in average net sales from pre- to post-remodel in fiscal first-quarter 2023. With solid participation from its franchisees, the company anticipates the program to be a driving factor of sales in the upcoming periods.
Jack in the Box emphasizes on the Del Taco Restaurants acquisition to drive growth. During second-quarter fiscal 2023, same-store sales rose 3.2%, comprising franchise same-store sales growth of 2.8% and company-operated same-store sales growth of 3.5%. During the quarter, the company reported three franchise openings with no company-owned closure. Subsequent to the quarter, the company also refranchised 17 Del Taco restaurants in Las Vegas to an existing Del Taco franchisee. This included development agreements for 10 new Del Taco restaurants to be built in Las Vegas, Wyoming and Montana.
Given the unit-expansion efforts coupled with an emphasis on the Del Yeah! Rewards program, the company anticipates the initiatives to better target guests and drive average spend and frequency in the upcoming periods.
Image Source: Zacks Investment Research
In the past three months, shares of Jack in the Box have gained 10.6% compared with the industry’s 3.3% growth.
Concerns
The company is persistently shouldering higher expenses, which have been detrimental to margins. During the fiscal second quarter, the company reported a rise in commodity inflation, advertising cost, wage inflation and higher utilities and maintenance and repair costs. In the second quarter of fiscal 2023, the company witnessed a 4.8% wage inflation and a 7.7% commodity inflation. Commodity costs grew due to a rise in price in nearly all categories, except pork and beef. The maximum impact was seen in sauces, potatoes, beverages and bakery. The company stated concerns about a challenging inflationary environment in 2023. For fiscal 2023, the company expects commodity cost inflation to be up 7-9% compared with fiscal 2022.
Zacks Rank & Key Picks
Jack in the Box currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Retail-Wholesale sector include:
Chuy's Holdings, Inc. (CHUY - Free Report) sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 23.4%, on average. Shares of CHUY have skyrocketed 97.1% in the past year. You can see the complete list of today’s Zacks Rank #1 stocks here.
The Zacks Consensus Estimate for Chuy’s Holdings’ 2023 sales and EPS suggests growth of 9.9% and 27%, respectively, from the year-ago period’s levels.
BJ's Restaurants, Inc. (BJRI - Free Report) sports a Zacks Rank #1. BJRI has a long-term earnings growth rate of 15%. The stock has improved 44% in the past year.
The Zacks Consensus Estimate for BJ's Restaurants’ 2023 sales and EPS suggests growth of 5.5% and 311.8%, respectively, from the year-ago period’s levels.
Arcos Dorados Holdings Inc. (ARCO - Free Report) carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth rate of 9.5%. The stock has rallied 48.3% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2023 sales and EPS suggests growth of 13.4% and 4.4%, respectively, from the year-ago period’s levels.