Shares of restaurant operator Jack in the Box (NASDAQ:JACK) are tanking today after its fourth-quarter EPS of $1.09 lagged expectations by $0.05. Additionally, revenue declined by 7.5% year-over-year to $372.5 million.
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During the quarter, same-store sales at Jack in the Box increased by 3.9% on the back of pricing gains. Further, the restaurant level margin improved to 20.7% from 16.2% in the year-ago period. At the same time, commodity costs increased by 3.4%. At the end of the quarter, it had 90 new agreement signings for a total of 389 restaurants. Of these, 351 are slated for future development. The total store count for Jack in the Box restaurants stood at 2,186 at the end of Q4.
In contrast, same-store sales at Del Taco declined by 1.5%, primarily due to declines in transactions and menu mix. Further, wage inflation and higher costs led to restaurant level margin contracting to 14.8% from 15.9% in the year-ago period. The total number of Del Taco restaurants remained largely unchanged at 592 at the end of the quarter.
Despite these cost challenges, JACK repurchased shares worth $90.7 million in Fiscal 2023 and announced a new share repurchase program of up to $250 million last week. In addition, the company announced a quarterly dividend of $0.44 per share. The JACK dividend is payable on December 28 to investors of record on December 14.
For Fiscal year 2024, company-owned outlets are expected to experience 1% to 3% higher commodity costs, with wage rates anticipated to rise in the range of 10% to 12%. Operating EPS for the year is seen landing between $6.25 and $6.50. The company anticipates same-store sales growth of low-to-mid single digits at both Jack in the BOX and Del Taco.
Will Jack in the Box Stock Go Up?
Overall, the Street has a Hold consensus rating on Jack in the Box. Following a nearly 8% price surge over the past month, the average JACK price target of $80.58 implies a further 17% potential upside in the stock.
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