TACO

Del Taco Restaurants Inc

Consumer, SPAC


Presented:04/15/2015
Price:$14.14
Cap:$0.27B
Current Price:$12.51
Cap:$0.46B

Presented

Date04/15/2015
Price$14.14
Market Cap$0.27B
Ent Value$0.27B
P/E RatioN/A
Book Value$1.04
Div YieldN/A
Shares O/S18.75M
Ave Daily VolN/A
Short IntN/A

Current

Price$12.51
Market Cap$0.46B
Levy Acquisition Corp. does not have significant operations. It intends to complete a business combination with an operating company in the restaurant and hospitality sectors. The company was founded in 2013 and is based in Chicago, Illinois.

Publicly traded companies mentioned herein: Chipotle Mexican Grill Inc (CMG), El Pollo Loco Holdings Inc (LOCO), The Habit Restaurants Inc (HABT), Jack in the Box Inc (JACK), Levy Acquisition Corp (TACO), McDonald’s Corporation (MCD), Popeyes Louisiana Kitchen Inc (PLKI)

Highlights

The presenter is long shares of Levy Acquisition Corp (TACO), a special purpose acquisition company (SPAC) that was established by Larry Levy and his sons and is set to acquire Del Taco in June, 2015. He characterized TACO as the “most compelling” name in the restaurant industry right now (a group he feels is generally overvalued), and likes the risk/ reward setup at ~$14. Everything with the deal appears to be moving forward on schedule, and the implied valuation of the company (which is expected to trade under the symbol TACO) is ~10x EV/EBITDA. This is a substantial discount to peers in the restaurant industry such as its closest comp El Pollo Loco (trading at 17x - 18x), and even fast food giant McDonalds (11x). He sees limited downside risk and asymmetric upside for shareholders as the company grows from its current base of just ~550 locations.

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Idea Discussion

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