JACK - Jack in the Box trades higher after higher pricing Del Taco strength factors in

Jack in the Box ( NASDAQ: JACK ) traded higher on Wednesday after revenue and comparable sales for FQ3 topped expectations. The Del Taco chain outperformed the namesake chain with a 3.6% comp for the quarter.

On the expense side, commodity costs increased in the quarter by approximately 16.8%, primarily due to increases in proteins, sauces, oil and beverages. Wage inflation was 13.2% Y/Y.

JACK's EBITDA tally missed the consensus mark due to higher G&A and lower restaurant margins, according to Cowen analyst Andrew Charles.

Charles thinks the challenged state of restaurant profitability will present headwinds for JACK in the near-term.

"We note Jack restaurant margin guidance was reduced to 16% from 17% due to the challenged state of margins despite continued guidance for high single digits pricing that suggests double-digit levels in 2H."

On the development front, JACK continues to guide to 4% net restaurant growth beginning in 2025. The company inked deals for 8 development agreements for 15 restaurant openings, which Charles said is a slower pace relative to 4 development agreements signed in Q2 for 17 restaurant openings and 26 development agreements signed for 98 restaurant openings in Q1.

Shares of JACK rose 3.64% to $78.23.

Read more details about the JACK Q2 earnings report.

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