American fast-food restaurant chain Jack in the Box, Inc. (JACK) reported better-than-expected fiscal third-quarter results (ended July 4), backed by same-store sales growth. However, shares fell 4.7% in after-hours trading on August 4.
Earnings for the quarter came in at $1.79 per share, up 26.1% year-over-year, and outpaced the Street’s estimate of $1.46 per share.
Reflecting another positive, total revenues grew 11.2% to $269.46 million, compared to the prior-year period, and beat analysts’ expectations of $257.49 million.
Notably, systemwide same-store sales increased 10.2%, while company operated same-store sales grew 9%. Additionally, Franchise same-store sales were up 10.3%. The company ended the quarter with 2,219 total stores. (See Jack in the Box stock charts on TipRanks)
Commenting on the results, Darin Harris, the company’s CEO, said, “Comps on a two-year basis of +16.8%, coupled with solid earnings performance, are all part of creating the store-level profitability that will help us maximize our growth and expansion opportunities going forward.”
Following the fiscal Q3 earnings release, Cowen & Co. analyst Andrew Charles reiterated a Buy rating on the stock with a price target of $140, implying 34.7% upside potential to current levels.
Charles commented, “We like the new streamlined approach JACK is taking under new management to grow the top line. This includes returning to more on-brand, premium menu innovation + marketing efforts, a speed of service blueprint that is ready for implementation but was delayed by COVID-19, and value in the form of snacking/add-on’s that are more margin friendly.”
The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 9 Buys and 4 Holds. The average Jack in the Box price target of $132.08 implies 27.1% upside potential to current levels. Shares have gained 28.1% over the past year.
According to TipRanks’ Smart Score system, Jack in the Box gets a 7 out of 10, which indicates that the stock is likely to perform in line with market averages.
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