Papa John's International (PZZA) AI Stock Analysis

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Papa John's International

(NASDAQ:PZZA)

Rating:62Neutral

Price Target:

$44.00

▲( 7.32% Upside)

Papa John's overall stock score of 62 reflects a balanced view of its performance and prospects. Strengths include reasonable valuation and strategic initiatives like technology partnerships and loyalty program expansion. However, financial risks are present due to high leverage, declining domestic sales, and profitability challenges. Investors should weigh the attractive dividend yield against the financial risks.

Positive Factors

Financial Performance

Revenue of $518M outpaced consensus of $514M indicating a positive financial performance.

Market Share

Papa John's brand gained market share in the first quarter, showing competitive strength.

Product Innovation

Oven recalibration efforts are key to unlocking accelerated product innovation, leading to better product quality and higher customer satisfaction.

Negative Factors

Advertising Costs

Incremental advertising will be a ~$0.50 headwind to earnings in FY25.

Competition

The upcoming launch of Domino's on the DoorDash platform could pose a negative same-store sales challenge for Papa John's.

Same-Store Sales

The analysis of Placer AI traffic data shows continued pressure on near-term same-store sales trends for Papa John's.

Papa John's International (PZZA) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$1.34B

Dividend Yield4.51%

Average Volume (3M)1.08M

Price to Earnings (P/E)17.3

Beta (1Y)0.86

Revenue Growth-2.77%

EPS Growth4.01%

CountryUS

Employees11,400

SectorConsumer Cyclical

Sector Strength74

IndustryRestaurants

Share Statistics

EPS (TTM)0.36

Shares Outstanding32,738,434

10 Day Avg. Volume1,280,103

30 Day Avg. Volume1,084,914

Financial Highlights & Ratios

PEG Ratio-1.24

Price to Book (P/B)-2.92

Price to Sales (P/S)0.00

P/FCF Ratio36.66

Enterprise Value/Market Cap1.64

Enterprise Value/Revenue0.26

Enterprise Value/Gross Profit4.53

Enterprise Value/Ebitda2.37

Forecast

1Y Price Target

$50.11

Price Target Upside22.22% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering11

Papa John's International Business Overview & Revenue Model

Company DescriptionPapa 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 MoneyPapa 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 exhibits solid revenue growth and operational efficiency, with robust cash flow management. However, it faces challenges with cost pressures, declining net profit margin, and a concerning negative equity position, which poses financial stability risks.

Income Statement

Positive

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

Neutral

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

Positive

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.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
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
227.84M	212.50M	161.06M	217.06M	137.02M
	Net Income Common Stockholders
83.49M	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
971.13M	965.72M	807.26M	685.50M	513.57M
	Net Debt
933.17M	925.13M	759.89M	614.89M	383.37M
	Total Liabilities
1.30B	1.32B	1.13B	1.05B	1.14B
	Stockholders Equity
-429.53M	-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

Positive

Last Price41.00

Price Trends

50DMA

37.52

Positive

100DMA

39.57

Positive

200DMA

43.51

Negative

Market Momentum

MACD

1.43

Negative

RSI

63.71

Neutral

STOCH

78.26

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PZZA, the sentiment is Positive. The current price of 41 is above the 20-day moving average (MA) of 36.87, above the 50-day MA of 37.52, and below the 200-day MA of 43.51, indicating a neutral trend. The MACD of 1.43 indicates Negative momentum. The RSI at 63.71 is Neutral, neither overbought nor oversold. The STOCH value of 78.26 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PZZA.

Papa John's International Risk Analysis

Papa John's International disclosed 36 risk factors in its most recent earnings report. Papa John's International reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Papa John's International Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DPZ	77 Outperform	$17.04B	28.52	-14.74%	1.27%	4.28%	13.76%
TXRH	76 Outperform	$12.70B	29.51	33.55%	1.31%	15.09%	31.24%
WING	70 Outperform	$9.15B	54.99	-16.09%	0.31%	30.98%	112.65%
YUM	67 Neutral	$41.43B	29.71	-19.43%	1.82%	10.09%	-11.50%
WEN	66 Neutral	$2.35B	13.07	90.40%	8.16%	2.18%	-5.15%
PZZA	62 Neutral	$1.34B	17.28	-20.16%	4.51%	-2.77%	4.01%
Sector *	62 Neutral	$6.97B	11.36	2.77%	3.91%	2.66%	-22.00%

* Consumer Cyclical Sector Average

Performance Comparison

PZZA

Papa John's International

41.00

-4.28

-9.45%

DPZ

Domino's Pizza

480.49

-14.70

-2.97%

TXRH

Texas Roadhouse

187.10

23.11

14.09%

WEN

Wendy's

11.62

-5.14

-30.67%

YUM

Yum! Brands

146.43

12.06

8.98%

WING

Wingstop

322.48

-57.26

-15.08%

Papa John's International Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q1-2025)

% Change Since: 24.54%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a company making strides in marketing, loyalty, and international growth, with promising technological partnerships. However, it also faces challenges in domestic sales and profitability, indicating a mixed performance.

Q1-2025 Updates

Positive Updates

Sequential Improvement in Sales and Transactions

Papa John's experienced sequential improvement in sales and transaction comps compared to Q4 2024, with a 4% increase in the number of pizzas ordered versus last year.

Successful Marketing Campaigns

The 'Meet the Makers' marketing campaign improved value perception and increased customer awareness and consideration, contributing to significant gains in brand health.

Loyalty Program Expansion

The Papa Rewards loyalty program added approximately 1 million members in Q1, increasing total membership to over 37 million, with significant growth among medium and high-frequency consumers.

International Sales Growth

International comparable sales increased by 3% year-over-year in Q1, with strength across focus countries, including mid-single digit or double-digit growth in key markets.

Technology Enhancements

A partnership with Google Cloud aims to enhance ordering and delivery experiences and improve personalization, leveraging AI for better customer engagement.

Negative Updates

Decrease in North America Comparable Sales

North America comparable sales decreased by 2.7% in Q1 compared to the prior year, with transaction comps down less than 1%.

Lower Company-Owned Restaurant Revenues

Company-owned restaurant revenue decreased by $17 million in Q1, driven by closures and refranchising of restaurants in the U.K. and lower domestic sales.

Adjusted EBITDA Decline

Consolidated adjusted EBITDA decreased to $50 million from $61 million a year ago, primarily due to higher G&A expenses and investments in marketing and loyalty programs.

Pressure on Domestic Restaurant Margins

Domestic company-owned restaurant segment EBITDA margins declined by 550 basis points, with pressures from lower average ticket prices and higher food costs.

Company Guidance

In the first quarter of 2025, Papa John's provided robust guidance highlighting several key metrics and strategic initiatives aimed at driving growth. The company reported a global system-wide restaurant sales of $1.22 billion, a 1% increase in constant currency. North America comparable sales decreased by 2.7%, but showed a sequential improvement of 290 basis points since the previous quarter. Despite a decrease in ticket comps by 2%, primarily due to strategic adjustments in their loyalty program, international sales increased by 3%. Papa John's anticipates system-wide sales growth of 2% to 5% for 2025, with North America comparable sales expected to range from flat to up 2%. The first quarter saw the addition of approximately 1 million loyalty members, bringing the total to over 37 million. The company is investing significantly in marketing, with an additional $25 million planned for 2025 to enhance brand perception and customer engagement. Furthermore, Papa John's is leveraging a new partnership with Google Cloud to improve its technology infrastructure, enhancing customer personalization and delivery efficiency. The company aims to open 85 to 115 new restaurants in North America and 180 to 200 internationally, while also evaluating refranchising opportunities to optimize growth and profitability.

Papa John's International Corporate Events

Financial Disclosures

Papa John’s Updates Investor Presentation Post FY 2024 Earnings

Neutral

Mar 12, 2025

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.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.