Jack in the Box (JACK): Investor Day Takeaways - Jefferies

Jefferies analyst, Alexander Slagle, attended the first Jack In The Box (NASDAQ: JACK) analyst day in 4 years where he heard a more favorable than expected outlook for EPS/EBITDA accretion related to refranchising initiatives/G&A reductions.

The team surprised them with a more aggressive outlook that will take G&A down to 2.0-2.5% of sys sales in just a few years. This is well-below the previous target of 3.0%, and represents one of the key drivers behind the more favorable than expected overall EPS/EBITDA accretion outlook related to planned refranchising/cost-structure realignment initiatives (up to $26-34mm EBITDA accretion & $0.65-0.78 EPS accretion under the 90% franchised scenario, with most expected to occur over the course of F17-18).

The F16 consensus base is only $3.57 in EPS and $320mm in EBITDA, with a cons outlook for only low-DD EPS growth in ‘17+. Mgmt now expects the JIB brand to be 90-95% franchised in just a few short years (from 82%), lever up toward 4x EBITDA or higher (from 3x), and sees a longer-term (F18-20) EPS growth rate in the mid-teens, supported by an acceleration in Qdoba unit growth (to 10-12%), 1-2% JIB unit growth, and continued buybacks (driving half of this growth).

No change to Buy rating or $87 PT.

For an analyst ratings summary and ratings history on Jack In The Box click here. For more ratings news on Jack In The Box click here.

Shares of Jack In The Box closed at $79.05 yesterday.

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