JACK

Jack In The Box, Inc.

Consumer


Presented:03/29/2022
Price:$90.32
Cap:$1.90B
Current Price:$46.29
Cap:$0.89B

Presented

Date03/29/2022
Price$90.32
Market Cap$1.90B
Ent Value$3.97B
P/E Ratio12.86x
Book ValueN/A
Div Yield1.95%
Shares O/S21.04M
Ave Daily Vol475,139
Short Int12.02%

Current

Price$46.29
Market Cap$0.89B
Jack in the Box, Inc. engages in operating and franchising a chain of quick-service and fast-casual restaurants. It operates through the Jack in the Box Restaurant segments. The Jack in the Box Restaurant segment offers a broad selection of distinctive products including burgers like Jumbo Jack burgers, and product lines such as Buttery Jack burgers including the Brunchfast menu. The company was founded by Robert Oscar Peterson in 1951 and is headquartered in San Diego, CA.

Publicly traded companies mentioned herein: Denny’s Corp (DENN), Jack in the Box Inc (JACK), McDonald’s Corp (MCD), Restaurant Brands International Inc (QSR), Wendy’s Co/The (WEN), Yum! Brands Inc (YUM)

Highlights

The presenter is long shares of Jack in the Box Inc (JACK), a QSR brand located primarily in the Southwest. JACK traded at earnings multiples in the high teen–low-20x range pre-COVID but has derated significantly compared to peers (MCD, WEN, YUM, QSR) and its past valuation, and now trades at 12x consensus 2023 earnings. Following a management overhaul in 2020-21, JACK has recommitted to investing in its stores and growth. This includes its $585MM acquisition of Del Taco, another QSR brand with a similar geographic footprint, which the presenter considers a positive acquisition due to the refranchising opportunity it provides JACK. He reaches a $9 2023 EPS figure that is above the Street’s $7.36 projection because it doesn’t incorporate the Del Taco refranchising opportunity that could help JACK generate cash to repurchase shares. Based on that analysis, JACK is trading at 10x fully franchised EPS, leaving significant upside if the stock just rerates to 15x (still a major discount to peers) when management comes out with a Del Taco refranchising plan.

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Idea Discussion

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