JACK - Jack in the Box: Patience Required

Summary

• Jack in the Box released its fiscal Q3 results last month, reporting quarterly revenue of $398.3 million, a 48% increase from the year-ago period.
• This was driven by higher pricing and the addition of 500 restaurants with the closing of the Del Taco acquisition, plus the benefit of a higher company-owned/franchisee ratio.
• Unfortunately, Jack in the Box was not immune from inflationary pressures, and restaurant-level margins were down sharply at both brands, despite significant pricing actions.
• At ~11.3x FY2022 earnings estimates, Jack in the Box is reasonably valued, but up against a difficult macro backdrop, I don't see a low-risk buy point just yet.

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