JACK: Turnaround Plan Will Seek EBITDA Recovery Amid Ongoing Sales And Margin Pressures

Analysts have trimmed their average price target on Jack in the Box to about $20.56 from $19.89, reflecting modestly higher long term valuation multiples even as they factor in Del Taco's sale, weak same store sales trends, and a multi year turnaround under the Jack on Track plan in a challenging quick service backdrop.

Analyst Commentary

Street research following the latest quarterly update has coalesced around lower price targets, but with a split view on the long term potential of Jack in the Box as a streamlined, standalone brand following the Del Taco sale.

Bullish Takeaways

• Bullish analysts view the announced sale of Del Taco and the shift to a standalone Jack in the Box model as simplifying the story and improving focus on core brand execution, which could support valuation multiples over time.
• Initial 2026 EBITDA guidance of approximately $225M to $240M is generally seen as achievable, with potential upside if traffic stabilizes and efficiency gains from the Jack on Track plan materialize faster than expected.
• Some forecasts assume sequential improvement in same store sales through 2026, with the view that easier comparisons, marketing initiatives, and menu optimization could turn negative comps into modestly positive growth by the back half of the year.
• Supportive voices argue that, at current depressed share levels and reduced expectations, modest operational improvement could drive outsized equity returns as sentiment and earnings estimates reset higher.

Bearish Takeaways

• Bearish analysts highlight ongoing same store sales weakness and traffic softness, noting that management itself expects comps to remain challenged in the near term. This is seen as constraining visibility and justifying lower price targets.
• There is concern that 2026 guidance may be ambitious given the tough quick service backdrop, with some models now assuming flat to slightly negative same store sales even after the turnaround actions.
• Margin pressure from sales deleverage, commodity inflation, and higher labor costs, including in key markets like Chicago, is seen as a structural headwind that limits near term EBITDA recovery and compresses valuation.
• More cautious views frame 2026 as a rebuilding year rather than an inflection point, arguing that the Jack on Track plan will take longer to translate into sustainable growth and that the equity story remains high risk despite the lower share price.

What's in the News

• Jack in the Box is launching a year long 75th anniversary celebration, featuring the return of the Chicken Supreme sandwich in multiple combo options, limited edition Jibbi bag charms, app exclusive taco deals, and a pipeline of nostalgic menu items and merch slated throughout 2026 (company product announcement).
• The company rolled out its new value focused Munch Better Deals lineup, with three structured meals starting at $7. Options include a Brunchie Meal, a Lunchie Meal, and a Gremlins themed Midnight Meal that bundles core items with limited edition collectibles (company product announcement).
• Jack in the Box is gamifying promotions with DealQuest: Revenge of the Munchies. This is an in app Halloween campaign where players unlock escalating food offers and enter sweepstakes for gaming themed prizes by progressing through a choose your own adventure style experience (company product announcement).
• Management plans to keep the restaurant base roughly flat at 2,050 to 2,100 locations in 2026. This approach balances about 20 new openings against 50 to 100 predominantly franchised closures, highlighting a focus on pruning underperforming units while selectively expanding (company guidance).
• In connection with investor GreenWood Investors, Jack in the Box agreed to add two independent directors and form a Board level Capital Allocation Committee. This signals heightened scrutiny of capital deployment and alignment with an activist shareholder (company investor activism announcement).

Valuation Changes

• The consensus analyst price target has risen slightly, with fair value increasing from approximately $19.89 to about $20.56 per share.
• The discount rate is unchanged at 12.5 percent, indicating no shift in the assumed cost of capital or perceived risk profile.
• Revenue growth expectations remain effectively flat, holding around negative 7.61 percent, signaling a continued view of top line contraction in the near term.
• Net profit margin assumptions are essentially unchanged, staying near 7.46 percent and reflecting stable long term profitability expectations.
• Future P/E has risen modestly from roughly 6.24x to about 6.45x, implying slightly higher valuation multiples despite largely unchanged operating assumptions.