Jack in the Box Inc.: F2Q26: Challenging, But Some Demand Green Shoots; Another Leadership Transition

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Jack in the Box Inc.: F2Q26: Challenging, But Some Demand Green Shoots; Another Leadership Transition

UpdateMmultiple in our valuation with our PT remaining at $15 and stay EW with a more

cautious bent.

Green shoots of improvement but still challenged vs peers. While nearly 300bps

of sequential improvement, SSS was still negative in absolute at -3.8%, missing our -

3.4% which was below street (-2.4%). However, management noted QTD trends are

improving to near flat, attributed to the actions they've taken including with value/

premium barbell strategy along with better trends among Hispanics and Low

Income consumers, something we have not really heard among peers yet. Marketing

(around World Cup), menu innovations and collaborations (Hot Ones) are expected

to help drive continued momentum through year end to turn comps positive though

we take a more conservative view. JACK also believes menu simplification will be an

unlock, particularly on operations but is likely to be more of a 2027 impact than in

2026. RLM of 16.4% missed street by ~90bps, largely due to lower sales leverage

and commodity inflation which ran ~5% in F2Q driven by beef, but is expected to

moderate through the rest of the year. Adj EBITDA of $51M was in-line with St. and

$1M above MSe leading to adj EPS falling between MSe/St, of $0.78/$0.74 at $0.74.

2Q weakness drives F26 guidance down despite some sequential improvement:

Following nearly -4% SSS in F2Q, SSS guidance for the year was cut to -LSD% vs -

1% to +1% prior, which aligned with our prior thinking and St. QTD trends are said to

be approaching flat, with expectations F4Q will be positive, though to reach the

middle of guide (-2%), F4Q would need to be close+5%, which is possible given the

compare, but we will continue to model lower.