Loop Capital has adjusted its price target on shares of Jack In The Box (NASDAQ: JACK) to $70.00, decreased from the previous $87.00, while sustaining a Buy rating on the stock.
The change follows the recent performance observations of the company's franchisee-operated stores in the United States.
The analysis by Loop Capital revealed that same-store sales for Jack In The Box experienced a deceleration in September but met the expectations set for the entire fourth fiscal quarter.
According to the firm's discussions with U.S. franchisees of Jack In The Box, there was a shift from flat sales to a 0.5% decline during the initial seven weeks of the fourth fiscal quarter, which further declined to between 1.0% and 1.5% over the concluding five weeks of the quarter.
The firm's assessment concluded that for the full fourth quarter, same-store sales for Jack In The Box fell within a range of 0.5% to 1.0%.
This performance aligns with Loop Capital's projection of a 1.0% decline and is close to the consensus estimate of a 0.6% decrease. When examining the performance on a two-year stacked basis, the firm noted that a 0.5-1.0% decline in franchised comps translates to a gain of 2.8-3.3%.
Additionally, the firm highlighted that the implied three-year stacks of 6.0-6.5% for Jack In The Box represent an acceleration from the reported three-year stacks of 4.6% in the third quarter of 2024.
In other recent news, Jack in the Box (NASDAQ:JACK) has seen a transition in its financial leadership, with the departure of CFO Brian Scott and the appointment of Dawn Hooper as interim CFO. Amid these changes, the company reported a 2.2% decrease in system same-store sales for the third quarter of 2024.
Despite this, Jack in the Box is focusing on expansion, announcing a new franchise agreement to open 12 new locations in the Chicago area.
In addition, Del Taco, owned by Jack in the Box, has opened a new restaurant in Kissimmee, Florida, featuring a collaboration with actor Danny Trejo's Trejo's Tacos. Analyst firm TD Cowen has revised its outlook on Jack in the Box's shares, lowering the price target to $57 from $59, while maintaining a Hold rating.
For the full year, Jack in the Box expects an adjusted EBITDA between $320 million and $325 million, with operating EPS of $6.10 to $6.25.
InvestingPro Insights
To complement Loop Capital's analysis, recent data from InvestingPro offers additional context on Jack In The Box's financial position. The company's market capitalization stands at $861.24 million, with a P/E ratio (adjusted) of 9.53 for the last twelve months as of Q3 2024. This relatively low P/E ratio could suggest that the stock is undervalued, aligning with Loop Capital's maintained Buy rating despite the lowered price target.
InvestingPro Tips highlight that management has been aggressively buying back shares, which may indicate confidence in the company's future prospects. This action could potentially support the stock price and benefit shareholders. Additionally, Jack In The Box has maintained dividend payments for 11 consecutive years, with a current dividend yield of 3.91%, which might appeal to income-focused investors.
However, it's worth noting that the company's revenue growth has been negative, with a 7.43% decline in the last twelve months as of Q3 2024. This aligns with the same-store sales deceleration observed by Loop Capital. Despite this, analysts predict that the company will be profitable this year, which could explain the maintained optimism from Loop Capital.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Jack In The Box's financial health and market position.
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