After premium products drove down comparable sales in the first seven weeks, Jack in the Box (NASDAQ: JACK) in the middle of the first quarter of the current financial year (FY19 Q1) has shifted to a more value-based approach. The new strategy, which will continue for the remainder of the year, arrested the slide in comp sales with minimal or no impact on the gross margin.
With comp sales growth and profitability being crucial in winning over the powerful stakeholder group, the franchise-operators, the future earnings releases will bring more clarity on the success of the new approach in doing so. Though with the new strategy, JACK will be competing against more established players in the industry, the mid-cap company, unlike its larger peers with overseas operations, is less affected by a rising dollar in a stable interest rate environment. While JACK’s options of further debt infusion and finding an acquirer fade away amid worsening credit ratios and franchisee discontent, holding the stock is the best approach, in my opinion, until the dust settles on the success of the new strategy.
Read the Full Article at:https://seekingalpha.com/article/4262433-jack-box-hold-clarity-new-strategy
Disclosure: I/We have no investments in the stocks mentioned in the above article and don’t intend to open any within the next 72 hours. I wrote this article for myself, and it expresses my opinion. I/We receive no compensation, nor do I/We have any business relationship with any companies whose stocks are mentioned in the article.