2QC26 preview: Workforce or World Cup?: Some +tive signs, but data diverge

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2QC26 preview: Workforce or World Cup?: Some +tive signs, but data diverge

pressure, 3) execution risk around speed of service, menu and marketing initiatives

which are critical to driving sales at Jack in the Box.

Krispy Kreme (DNUT)

DNUT is transitioning to a more capital-efficient business model by pruning unprofitable

doors, outsourcing delivery and logistics, strategically reducing capital expenditures on

new production capacity, and refranchising. We expect near-term results to remain

pressured as cost reductions lag revenue declines but believe these initiatives should

support higher incremental returns over time. We apply a 10.3x EV/EBITDA multiple,

based on the midpoint of DNUT's three- and five-year average relative multiples, to our

forward EBITDA estimate of $160.7mm for 2Q27-1Q28 to arrive at our $4.20 PO.

Downside risks: potential industry headwinds from higher-than-expected wages,

logistics, and commodity cost inflation, competition from other indulgence and

foodservice businesses, and failure to achieve targeted unit growth due to higher than

expected costs or other factors.

McDonald's (MCD)

Our 12-month $339 PO is based on a 1.1x relative P/E multiple to the equal-weighted

S&P 500, implying a 24.1x absolute multiple, applied to our forward EPS estimate 12

months from now. We believe this multiple is appropriate given structurally lower growth

and limited opportunities for margin expansion due to the franchised model, despite

continued topline strength. Applying the relative multiple to our forward EPS estimate of

$14.04 for 2Q27-1Q28 results in our $339 PO.

Risks to our price objective: To the upside, McDonald's could sustain elevated comps for

longer than expected based on company-specific initiatives or industry dynamics.