Jack in the Box (JACK), mcap=$1.42bn, price $68.44 vs $83.50

JACK pitch:
– Quick-service restaurant chain transforming into an asset-light franchisor led by a dynamic new CEO.
– Upon execution of the asset monetization and refranchising efforts expected to re-rate from 10x to 15x EBITDA in line with its highly franchised QSR peers.
– The new CEO is reinvigorating unit growth by mending franchisee relationships and improving unit economics.
– Investors are misconstruing the recent acquisition of Del Taco and the resulting temporarily lower franchised mix.
– On the contrary, this acquisition provides refranchising and real estate monetization opportunities.

JACK valuation:
– Trades at 10x fwd EBITDA, vs peers at 15x.
– Restaurant businesses have recently been acquired at 15x-21x multiples.
– The target of $132/share at 15x EBITDA.

Exp. gain: +70% to $132/share.

Full write-up (free guest account required):