A Jack in the Box With Legs

Unlike its menu options, which are regularly updated, the impressive performance at Jack in the Box (NYSE: JBX  ) keeps getting repeated, pushing its stock price to a new high. With earnings, sales, comps, and margins all making gains, it's no wonder this stock is a Street favorite.

In the second quarter, Jack in the Box increased earnings by 25% to $27.2 million, or $0.80 per share, easily topping estimates of $0.70 per share. Revenues were up 6.8% to $660.7 million and comps gained 6.4% in the quarter as average checks increased and more transactions occurred. It's even giving Chipotle (NYSE: CMG  ) (NYSE: CMG-B  )  cause for concern as its Qdoba locations increased comps by 3.5% on top of last year's 5.6% jump.

In an effort to keep customers coming back hungry for more, Jack in the Box hasn't been hesitant about updating its menu. In the second quarter, it added new choices, including a steak 'n' mushroom sandwich, grilled cheese for the kiddies, and a mint shake with the help of Tootsie Roll's (NYSE: TR  ) Andes minty chocolates. It will continue that trend in the third quarter as it has already introduced a new 100% sirloin burger and added blackberry to its shake options.

In addition to its successful operations, Jack in the Box is also taking care of matters on the business side. It prepaid $60 million of its $475 million term loan in the second quarter, reducing borrowing rates by 25 basis points and generating an annualized interest savings of $2 million.

The company obviously feels strongly about its prospects and presented third-quarter estimates to back it up. It expects to report earnings of $0.85 to $0.89 per share even with an expected 5% to 6% increase in beef prices. Analysts were expecting earnings of just $0.82 per share. The company also anticipates comps to remain strong with a growth rate of 5% to 6%. For the year, it raised its guidance to a range of $3.45 to $3.50 per share with comps expected to grow by 5% to 6%.

It has obviously been a remarkable run, and it's projected to continue for some time. The company certainly seems serious about its plans to compete with the big boys such as McDonald's (NYSE: MCD  ) and is off to a tremendous start. Naturally, some will be concerned about buying in after such rapid stock-price gains. However, with plenty of expansion possibilities, it may not be unreasonable to expect it to climb even higher. After all, based on its projections, the company has a forward P/E of about 22, which is pretty comparable to the ratios of its peers. Like much of its menu, Jack in the Box is certainly a tempting option.

For more on what Jack in the Box is serving up, check out:

Chioptle has been recommended in our Rule Breakers service; its B shares are a Motley Fool Hidden Gems pick. Try out either service free for 30 days.

Fool contributor Mike Cianciolo welcomes feedback and doesn't own any of the companies in this article. The Fool has a disclosure policy.

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