8 Cheap Restaurant Stocks to Buy According to Hedge Funds

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

Forward Price to Earnings Ratio: 8.93

Number of Hedge Fund Holders: 16

Jack in the Box Inc. (NASDAQ:JACK) is an American restaurant company specializing 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.

Rising labor costs, a surge in ingredient prices, and changing consumer preferences amid rampant inflation have pressured JACK’s financial performance this year, resulting in its share price dropping by 40% year-to-date.

During its recent Q4 2024 earnings call on November 20, the company reported a drop in same-store sales for both Jack in the Box and Del Taco. Consolidated adjusted EBITDA for the quarter was $65.5 million, down 4.2% compared to the same period last year because of the impacts of lower sales and Del Taco re-franchising. The company was also pushed by the new minimum wage regulation in California, which further drove up its labor costs.

Despite a dip in sales, Jack in the Box Inc. (NASDAQ:JACK) is undergoing robust expansion. The company opened 16 new locations during the quarter, with plans to enter the Florida market in fiscal year 2025. There have been 30 new Jack openings for the full year, the highest number in over a decade. JACK is also witnessing impressive digital sales growth (14% in Q4), which bodes well for the company’s efforts to improve to increase its loyalty guest base.

Cash flow from operations stood at $29.6 million in Q4 and $68.8 million for the full year. Capital expenditures, which include digital initiatives and investments in technology, were $29.7 million for the quarter and $115.5 million for the full year. Jack in the Box Inc. (NASDAQ:JACK) is also returning cash to shareholders through dividends and share repurchases. On November 14, the Board declared a cash dividend of 44 cents per share to be paid on December 30. For FY 2024, it repurchased approximately 1.1 million shares for $70 million.

Jack in the Box Inc. (NASDAQ:JACK) is among the top cheap restaurant stocks to buy according to hedge funds.