Jack In The Box Soars 7% On Higher 4Q Revenue; Analyst Raises PT

Jack in the Box shares were up 6.6% in pre-market trading on Thursday as the fast food chain ended FY20 (ended Sep. 27) with strong fourth quarter results.

The company’s 4Q revenue grew 15.4% year-over-year to $255 million, exceeding analysts’ consensus estimate of $249 million. Jack in the Box’s (JACK) system-wide same-store sales rose 12.2% in 4Q. Same-store sales for company-owned locations rose 9.6%, driven by a 21.9% increase in average check, partially offset by a 12.3% decline in transactions. Franchise same-store sales grew 12.4%.    

The hamburger chain’s adjusted EPS increased 69.5% year-over-year to $1.61 on improved restaurant margins. Analysts expected adjusted EPS of $1.14. Jack in the Box did not issue any guidance for FY21 owing to the uncertainty associated with the pandemic. However, the company indicated that the 4Q momentum continued in 1Q FY21. (See JACK stock analysis on TipRanks)

The company will provide more details about its performance during the conference call scheduled for today (Nov. 19). Meanwhile, the company announced a quarterly dividend of $0.40 payable on Dec. 18 to shareholders of record at the close of business on Dec. 2. The company had announced in August that it has reinstated its quarterly dividend following their suspension earlier this year due to the pandemic. JACK has a dividend yield of 1.84%.

In reaction to the 4Q performance, Oppenheimer analyst Brian Bittner reiterated a Buy rating and increased the price target to $110 from $100. In a research note to investors, Bittner stated, “Consistent with our preview, JACK delivered strong 4Q20 results with double-digit SSS [Same Store Sales] and a ~20% EBITDA beat. Importantly, the sales momentum appears to have continued into 1Q21 and our analysis suggests material upgrades to consensus SSS forecasts are required.”

“Despite keeping conservatism in our financial model, we meaningfully raise ’21/’22 EBITDA estimates. This dynamic clearly underpins the attractiveness of JACK’s heavily discounted valuation, particularly with new mgmt.’s plans to accelerate unit expansion and the potential to restart large share repurchases,” added Bittner.

Shares have risen 10.7% year-to-date. The average price target stands at $97.38 and indicates an upside potential of 12.5%. The Street is cautiously optimistic about Jack in the Box, with 4 Buys and 4 Holds adding up to a Moderate Buy analyst consensus.  

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