10 Best Restaurant Stocks To Buy According to Analysts

4. Jack in the Box Inc. (NASDAQ:JACK)

Average Share Price Upside Potential as of November 12: 39.09%

Jack in the Box Inc. (NASDAQ:JACK) is an American restaurant company that specializes in quick-service food. The hamburger giant operates around 2,200 restaurants across 22 states. It also owns Del Taco, a Mexican fast-food chain with more than 600 restaurants nationwide.

The stock has been under pressure this year, having dropped by over 45% YTD due to rising labor costs, an increase in commodity prices, and a change in consumer habits amid rampant inflation in the country. These have affected JACK’s financial performance.

During Q3 2024, same-store sales for Jack in the Box Inc. (NASDAQ:JACK) declined by 2.2%, with company-owned same-store sales growing 0.1%, while franchise restaurant comps decreased by 2.4%. The restaurant-level margin dropped by 0.8% to $21.1 million, which was attributed to higher labor and operating expenses. The franchise-level margin was $74.6 million, down from $75.3 million a year ago. This was due to an overall drop in sales and the resulting decrease in royalty.

Del Taco’s same-store sales also decreased by 3.9% during the quarter. Company-operated restaurants saw a 3.5% decline in same-store sales, whereas franchise same-store sales dropped by 4.1%. Restaurant-level margin was $8.8 million, or 13.4%, down 400 basis points from last year. The company also recorded a non-cash goodwill impairment of $162.6 million for Del Taco, which has resulted in a consolidated diluted loss per share of $6.26 compared to an EPS of $1.41 in the prior year.

Cash flow from operations was at $45.3 million in Q3. Jack in the Box Inc. (NASDAQ:JACK) spent $24.7 million in capital expenditure including investments in technology, digital initiatives, and the opening of new restaurants. It also repurchased 272,000 shares of common stock during the quarter. On August 2, it declared a cash dividend of $0.44 per share to be paid in September.

Despite a downturn in sales, Jack in the Box Inc. (NASDAQ:JACK) has a robust expansion plan in place, opening 14 restaurants this year, and plans to enter the Chicago and Florida markets in fiscal year 2025. Del Taco has also had 12 openings this year, with plans to open three more outlets before the year closes. Some of its recent openings have been a tremendous success, posting record first-week sales. Late-night sales are also on the rise for both Jack and Del, indicating an encouraging potential for sales ahead.

Wall Street analysts have a consensus Buy rating for Jack in the Box Inc. (NASDAQ:JACK), with a share price upside potential of 39.09%, making it one of the best restaurant stocks to buy according to analysts.