Why Jersey Mike's Stock Jumped Today
Key Points
People dig Jersey Mike's sandwiches.
Management plans to sell a whole lot more of them in the coming years.
- 10 stocks we like better than Jersey Mike's Subs ›
Shares of Jersey Mike's Subs (NYSE: JMKE) rose more than 7% on Wednesday after the popular sandwich chain announced its first quarterly financial performance as a newly minted public company.
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A cut above
Jersey Mike's is earning accolades from diners and business owners alike.
The sub shop recently dethroned Chick-fil-A to become the top-rated quick-service restaurant, according to a June study by the American Customer Satisfaction Index (ACSI).
And in May, Entrepreneur Magazine ranked Jersey Mike's the No. 1 franchise opportunity, due in part to its "financial strength and stability, operational and marketing support, and brand power."
These accolades are beginning to show up in Jersey Mike's financial figures.
The sandwich joint opened 83 stores during its fiscal second quarter, bringing its total to 3,378 locations as of June 28.
Existing locations also continue to perform well. Same-store sales, which measure revenue at traditional stores open for at least 425 days, grew 2.3%.
"Same-store sales accelerated in the second quarter, driven by transaction growth, which is particularly encouraging given challenged traffic trends across the industry," CEO Charlie Morrison said.
In all, Jersey Mike's total revenue rose 10% year over year to $208 million. Its earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 7% to $114 million.
A long runway for further expansion
Jersey Mike's expects its same-store sales to increase by 3% to 4% in its fiscal third quarter. The company also projects adjusted EBITDA growth of at least 13%.
Looking further ahead, management sees an opportunity to grow Jersey Mike's store count more than fourfold.
"Over the long term, we believe Jersey Mike's has the potential to support more than 7,500 locations in the U.S. and 15,000 globally," Morrison said during a conference call with analysts.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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