One sandwich chain is still early in its life as a public company, and Bank of America already sees reasons for investors to get more bullish.
The chain’s latest results showed improving customer traffic alongside continued expansion, giving Wall Street another look at the growth story following its July debut.
The momentum has Bank of America looking past some near-term expense pressure and focusing on what it sees as a stronger long-term setup.
Jersey Mike’s Subs (JMKE) reported second-quarter same-store sales growth of 2.3%, primarily driven by transaction growth, while systemwide sales increased 10% to $1.21 billion.
Total revenue also rose 10% to $208 million, and digital sales represented 43% of systemwide sales, up from 41% a year earlier. The company opened 83 restaurants during the quarter, helping push net unit growth to 8.1%.
Bank of America sees Jersey Mike’s traffic trends improving
Bank of America analyst Sara Senatore said in a note given to TheStreet that improving traffic is strengthening the firm’s confidence in Jersey Mike’s outlook. Senatore reiterated a Buy rating and raised the firm’s price objective to $29 from $27, implying roughly 30% upside from the $22.37 share price cited in the Sept. 9 note.
Senatore pointed to third-quarter-to-date same-store sales running above 3% after growth improved to 2.3% in the second quarter from 1.7% in the first quarter. With roughly one percentage point of pricing expected during the second half, BofA believes the acceleration reflects stronger traffic.
The analyst also highlighted Jersey Mike’s shift toward digital advertising, loyalty membership growth of 22% year over year, and a digital sales mix that has reached 43%. BofA believes those changes could support additional customer frequency as the company works to broaden its audience.
Jersey Mike’s advertising spending clouds stronger profit growth
Profit growth looked less impressive on the surface, with adjusted EBITDA increasing 7% to $114 million while net income fell to $37 million from $59 million a year earlier.
Jersey Mike’s said adjusted EBITDA absorbed a $10 million adverse impact from advertising-fund timing. Excluding that impact, adjusted EBITDA would have increased 18%. Its quarterly SEC filing also showed higher expenses tied to Area Director buyouts, IPO costs, and the company’s transition from a founder-led organization.
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Those pressures have not stopped management from setting an upbeat full-year outlook. Jersey Mike’s expects fiscal 2026 same-store sales growth of 2.5% to 3%, net unit growth of at least 8% and adjusted EBITDA growth of at least 20%.
Third-quarter same-store sales are expected to increase 3% to 4%, giving investors another potential sign that the second-quarter improvement can continue.
New restaurants strengthen the growth case
Bank of America sees Jersey Mike’s store economics as another reason for optimism. Senatore said the 2026 class of new restaurants is generating higher average unit volumes than the 2025 class at the same stage, while BofA estimates franchise cash-on-cash returns above 40%.
That performance gives BofA more confidence in Jersey Mike’s ability to keep opening restaurants at a healthy pace. The company ended the second quarter with 3,378 locations, 99% of which were franchised.
BofA’s $29 price objective assumes Jersey Mike’s eventually reaches more than 7,500 domestic stores and average unit volumes above $2 million by 2036. Senatore also raised the terminal EV/EBITDA multiple used in her valuation to 22 times from 21 times, reflecting increased confidence in the company’s long-term growth profile.
For investors, improving traffic may be the strongest signal behind BofA’s bullish call. If Jersey Mike’s can pair those transaction gains with productive new restaurants, the sandwich chain could have more room to grow than its recent share price suggests.
Related: Jersey Mike’s store location plan sparks Bank of America outlook
