Popeyes Louisiana Kitchen Is Tasty For Shareholders, Jefferies' Slagle Says

Jefferies' Alexander Slagle said that

appeared poised for further market share gains. The analyst reiterated a Buy rating for the company, and a price target of $69. Popeyes Louisiana Kitchen reported its 2Q EPS at $0.44, in-line with expectations, representing 24 percent y/y growth. The company's global SSS of 7.5 percent was higher than the consensus expectation of 6 percent. The domestic SSS, at 7.9 percent, was significantly higher than expectations of 6 percent. The SSS performance in the second quarter demonstrated "the power of the brand, as the domestic system benefited from another strong line-up of promotions, which were supported by effective national media efforts, driving record AWS levels and a 550bps gap vs. QSR peers," Slagle wrote. Slagle believes that Popeyes Louisiana Kitchen's product pipeline remained robust and the company continued to gain market share and "further widen its competitive gap." The company generated 13 percent EPS growth on the back of "improved labor controls, food cost management & pricing," which helped store-level margin expansion of 80bps, despite higher commodity costs/wage pressures. "Strategic goals surrounding the cap structure & related investments remain on track, and will be addressed in more detail during the Oct 13th Analyst Day. The only notable update is the increase to its share repurch guide to $50-60mm from $40-50mm in '15," the Jefferies report stated.