Papa John's International (PZZA) AI Stock Analysis

• Market Cap: $1.15B
• Dividend Yield: 5.23%
• Average Volume (3M): 1.27M
• Price to Earnings (P/E): 13.8
• Beta (1Y): 0.99
• Revenue Growth: -3.57%
• EPS Growth: 2.31%
• Country: US
• Employees: 11,400
• Sector: Consumer Cyclical
• Sector Strength: 60
• Industry: Restaurants
• EPS (TTM): 2.53
• Shares Outstanding: 32,709,300
• 10 Day Avg. Volume: 1,425,413
• 30 Day Avg. Volume: 1,272,745
• PEG Ratio: 5.99
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.71
• Price to Cash Flow (P/CF): 7.20
• P/FCF Ratio: 7.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $53.78
• Price Target Upside: 67.33% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 11

Papa John's faces a mixed outlook. Financial stability is a concern due to negative equity and cost pressures, although cash flow remains strong. Technical indicators suggest cautious sentiment, while valuation is reasonable with an attractive dividend yield. The recent earnings call highlighted both achievements and challenges, adding to a balanced but cautious outlook.

Positive Factors

Brand Repositioning

PZZA has made meaningful strides repositioning the brand following historical challenges, building a stronger foundation to realize unit growth, comp momentum, and cash returns to shareholders over a multi-year time horizon.

Digital Strategy

Industry leading digital mix at ~85% is a notable competitive advantage, with work underway to drive personalized offers relative to existing undifferentiated communication sent across loyalty base.

International Sales

International SSS growth and system unit growth were above expectations, indicating potential positive trends.

Negative Factors

Guidance Concerns

PZZA provided 2025 guidance below consensus for unit growth and EBITDA.

Market Competition

Significant value competition across the category will also complicate these efforts as the year progresses.

Profitability Challenges

Commissary inefficiencies, coupled with price increases to improve the franchisors' margin, are challenging franchisees' profitability.

Papa John's International Business Overview & Revenue Model

Company Description

Papa John's International, Inc. operates and franchises pizza delivery and carryout restaurants under the Papa John's trademark in the United States and internationally. It operates through four segments: Domestic Company-Owned Restaurants, North America Commissaries, North America Franchising, and International Operations. The company also operates dine-in and delivery restaurants under the Papa John's trademark internationally. As of December 26, 2021, it operated 5,650 Papa John's restaurants, which included 600 company-owned and 5,050 franchised restaurants in 50 countries and territories. The company was founded in 1984 and is based in Louisville, Kentucky.

How the Company Makes Money

Papa John's International generates revenue primarily through the sale of pizzas and related items at both company-owned and franchised stores. A significant portion of its income comes from franchise royalties and fees, which are collected from franchisees based on a percentage of their sales. The company also makes money through the sale of food and supplies to its franchised stores, leveraging its supply chain operations. Additionally, partnerships with delivery platforms and strategic marketing initiatives contribute to its revenue streams by enhancing its market reach and customer engagement.

Papa John's International Financial Statement Overview

Summary

Papa John's has shown revenue growth and operational efficiency; however, the negative equity on the balance sheet and increased cost pressures have raised concerns about financial stability. Cash flow management remains solid, but the decline in free cash flow in 2024 needs attention.

Income Statement

Papa John's shows consistent revenue growth over the years, with a notable increase from 2019 to 2023. However, in 2024, there was a slight decline in revenue. The gross profit margin has improved over time, peaking in 2023. Despite a strong gross margin, the net profit margin dropped in 2024, indicating increased expenses or cost pressures. EBIT and EBITDA margins have shown variability, with EBITDA margins remaining relatively stable, suggesting operational efficiency. Overall, the income statement reflects a solid growth trajectory but highlights potential cost challenges in the latest fiscal year.

Balance Sheet

The balance sheet reveals a concerning negative equity position, which has worsened over the years. This is due to significant liabilities outpacing assets. The debt-to-equity ratio is not calculable due to negative equity, but the increasing total debt indicates rising leverage. The return on equity (ROE) is positive but volatile due to fluctuating net income and negative equity. The equity ratio is negative, showing financial instability. While the company manages its debt, the negative equity situation poses a risk.

Cash Flow

Operating cash flow has remained robust, demonstrating the company's ability to generate cash from operations. However, free cash flow has fluctuated, with a significant decrease in 2024. The free cash flow to net income ratio indicates that free cash flow is consistently above net income, a positive sign. The operating cash flow to net income ratio has been healthy, though it declined in 2024. Overall, cash flow management is solid, though recent declines warrant attention.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
2.06B	2.14B	2.10B	2.07B	1.81B
	Gross Profit
580.96M	657.07M	390.54M	429.32M	344.20M
	EBIT
156.70M	147.14M	109.03M	168.24M	90.25M
	EBITDA
226.11M	212.50M	161.06M	217.06M	137.02M
	Net Income Common Stockholders
83.32M	82.10M	67.77M	120.02M	57.93M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
37.95M	40.59M	47.37M	70.61M	130.20M
	Total Assets
888.95M	875.00M	864.23M	885.70M	872.77M
	Total Debt
229.48M	965.72M	807.26M	685.50M	513.57M
	Net Debt
191.52M	925.13M	759.89M	614.89M	383.37M
	Total Liabilities
1.30B	1.32B	1.13B	1.05B	1.14B
	Stockholders Equity
-413.31M	-459.09M	-286.39M	-172.46M	-266.94M
Cash Flow		Free Cash Flow
34.15M	116.44M	39.42M	116.12M	150.79M
	Operating Cash Flow
106.63M	193.06M	117.81M	184.68M	186.44M
	Investing Cash Flow
-17.35M	-75.12M	-62.79M	-63.51M	-41.07M
	Financing Cash Flow
-91.67M	-124.08M	-76.24M	-180.53M	-43.46M

Papa John's International Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 32.14
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PZZA, the sentiment is Negative. The current price of 32.14 is below the 20-day moving average (MA) of 41.74, below the 50-day MA of 43.33, and below the 200-day MA of 45.07, indicating a bearish trend. The MACD of -1.05 indicates Positive momentum. The RSI at 43.69 is Neutral, neither overbought nor oversold. The STOCH value of 20.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PZZA.

Papa John's International Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CMG	77 Outperform	$63.25B	41.27	45.67%	―	14.61%	25.68%
YUM	73 Outperform	$41.26B	28.35	-19.43%	1.88%	6.68%	-7.09%
DPZ	68 Neutral	$14.97B	26.15	-14.74%	1.44%	5.07%	13.74%
PZZA	63 Neutral	$1.15B	13.85	-20.16%	5.23%	-3.57%	2.31%
WING	61 Neutral	$6.48B	62.80	-16.09%	0.47%	36.03%	57.51%
Sector *	59 Neutral	$10.97B	9.83	-1.56%	4.06%	1.31%	-16.49%

Papa John's International Corporate Events

Papa John’s Updates Investor Presentation Post FY 2024 Earnings

Papa John’s International, Inc. has released an updated Investor Presentation following its fiscal year 2024 earnings release. The presentation includes supplemental information for the interim periods and the full year ending December 29, 2024, which may impact stakeholders’ understanding of the company’s financial performance.

Papa John’s Celebrates 6,000th Restaurant Amid Sales Challenges

Papa John’s International announced its preliminary financial results for the fourth quarter and full year of 2024. Despite a decrease in North American comparable sales, the company achieved a significant milestone by opening its 6,000th restaurant, indicating strong brand confidence and growth potential. Global system-wide sales saw an approximate 8% decrease in the fourth quarter due to an extra operational week in 2023, while North American sales declined by 4%. International comparable sales rose by 2%, and the company added 122 net new restaurants during the quarter, highlighting its expansion efforts.