Jack in the Box (JACK, Financial) has announced a series of strategic steps aimed at optimizing its capital allocation. As part of these initiatives, the company will sell a portion of its owned real estate to enhance cash flow, focusing the proceeds on reducing debt. This decision comes with an immediate halting of dividend payouts, redirecting those funds similarly towards debt reduction and share repurchase plans.
The company plans to scale back its investments in new company-owned restaurant developments starting in 2026. Instead, it will prioritize upgrading existing restaurants through reimaging projects. Jack in the Box is also committed to advancing its digital and technological capabilities, which are expected to drive significant growth in digital sales channels.
A notable move includes a block closure program targeting 150-200 underperforming restaurants, many of which have over 30 years in operation. This initiative will see 80-120 restaurant closures by the end of 2025, with additional closures tied to franchise agreement expirations. This does not affect the anticipated closure of 1.5% to 2.0% of system units in FY 2025 and an ongoing 1% annual closure rate from FY 2026 onwards.
Upon completing these measures, Jack in the Box aims to achieve consistent, positive net unit growth, driven by promising new market performances and extensive untapped opportunities.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 19 analysts, the average target price for Jack In The Box Inc (JACK, Financial) is $40.16 with a high estimate of $65.00 and a low estimate of $24.00. The average target implies an upside of 57.98% from the current price of $25.42. More detailed estimate data can be found on the Jack In The Box Inc (JACK) Forecast page.
Based on the consensus recommendation from 22 brokerage firms, Jack In The Box Inc's (JACK, Financial) average brokerage recommendation is currently 2.6, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Jack In The Box Inc (JACK, Financial) in one year is $84.21, suggesting a upside of 231.27% from the current price of $25.42. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Jack In The Box Inc (JACK) Summary page.
Key Business Developments
Release Date: February 25, 2025
- Same-Store Sales (Jack in the Box): Positive 40 basis points for Q1.
- Same-Store Sales (Del Taco): Expected negative result for Q2.
- Restaurant Openings (Jack in the Box): 5 openings in Q1.
- Restaurant Closures (Jack in the Box): 6 closures in Q1.
- Restaurant Openings (Del Taco): 1 opening in Q1.
- Restaurant Closures (Del Taco): 6 closures in Q1.
- Restaurant Level Margin: Flat year over year at 23.2% for Jack in the Box.
- GAAP Diluted EPS: $1.75 for Q1, down from $1.93 in the prior year.
- Operating EPS: $1.02 for Q1, down from $1.95 in the prior year.
- Share Repurchase: 124,000 shares repurchased for $5 million in Q1.
- Capital Expenditure Guidance: Updated to $100 million to $105 million for the fiscal year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Jack In The Box Inc (JACK, Financial) reported positive same-store sales growth of 40 basis points in Q1, despite challenging macroeconomic conditions.
- The company successfully navigated the COVID-19 pandemic and made significant investments in its technology stack, enhancing its digital competitiveness.
- Jack In The Box Inc (JACK) plans to open between 35 and 45 new restaurants in fiscal year 2025, including expansions into Chicago and Florida.
- The company completed a new beverage partner contract, which positively impacted restaurant-level margins by 200 basis points in Q1.
- Del Taco's menu optimization initiative has shown encouraging results, driving higher attach rates and better average checks.
Negative Points
- Jack In The Box Inc (JACK) expects negative same-store sales results for both brands in Q2 due to ongoing macroeconomic pressures.
- The company experienced a decrease in GAAP diluted earnings per share, from $1.93 in the prior year to $1.75 in Q1 2025.
- Del Taco faced a challenging quarter with pressured same-store sales results and is also expected to post negative same-store sales in Q2.
- Jack In The Box Inc (JACK) reduced its share repurchase allocation from $20 million to $5 million for the fiscal year.
- The company anticipates a slight reduction in capital expenditures, adjusting the range to $100 million to $105 million for the year.
