Jack in the Box Inc. JACK recently provided an update on financial performance amid the COVID-19 pandemic. The company remains optimistic about third-quarter fiscal 2020 results as system same-store sales have accelerated in the quarter, following comps decline of 4.1% in the preceding quarter. Shares of Jack in the Box gained 5.9% in the after-hours trading session following the news on Jun 10.
Jack in the Box’s same-store sales through the first eight weeks (ended Jun 7, 2020) grew 5% from the corresponding period of 2019. The company expects to return to its typical quarterly reporting calendar and does not intend to issue further interim updates. The company plans to report fiscal third-quarter earnings on Aug 5, 2020.
During fiscal second-quarter earnings call, it stated that the company had minimal temporary closures and more than 99% of restaurants were in operation during the pandemic. It is operating only in an off-premise capacity. However, the company has withdrawn its 2020 guidance owing to the unprecedented nature of the COVID-19 crisis.
Strengthening Delivery Channel
Jack in the Box is increasingly focusing on delivery channels, a growing area for the industry. Given high demand for this service, the company has undertaken third-party delivery channels to bolster transactions and sales. It has partnered with DoorDash, Postmates and Grubhub. Recently, it also collaborated with Uber Eats. DoorDash delivery continued to generate an incremental lift in sales. The company is expanding mobile application in a few markets that support order-ahead functionality and payment. Management is reaping benefits in terms of higher ticket from mobile orders.
Delivery sales more than doubled in the fiscal second quarter and the company has been experiencing record high usage of its mobile app, with active users doubling since the start of the pandemic. As a reminder, more than 95% of its restaurants are covered by at least one of the four major delivery providers, with 80% utilizing no less than three of the major providers. Also, a shift in consumer behavior has led to a significant increase in check sizes as consumers are now placing larger orders, typically for multiple people.
Share Price Performance
Shares of this Zacks Rank #3 (Hold) company have surged 79.2% in the past three months compared with the industry’s 28% rally. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Some better-ranked stocks in the same space include Cracker Barrel Old Country Store, Inc. CBRL, Domino's Pizza, Inc. DPZ and Papa John's International, Inc. PZZA, each holding a Zacks Rank #2 (Buy).
In the past month, shares of Cracker Barrel have gained 36.8%.
Domino's and Papa John's have an impressive long-term earnings growth rate of 12.8% and 8%, respectively.
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Jack In The Box Inc. (JACK) : Free Stock Analysis Report
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Cracker Barrel Old Country Store, Inc. (CBRL) : Free Stock Analysis Report
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