Papa John's International (PZZA) AI Stock Analysis

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Papa John's International

(NASDAQ:PZZA)

Rating:65Neutral

Price Target:

$56.00

▲(11.07%Upside)

Papa John's overall stock score is driven by strong technical indicators and strategic initiatives highlighted in the earnings call. However, financial risks due to high leverage and mixed domestic performance temper the outlook.

Positive Factors

Acquisition Interest

Shares of Papa John's rallied significantly after headlines indicated several investors were considering a bid for the company.

Financial Performance

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

Market Share and Sales Growth

Papa John's brand gained market share in the first quarter, showing sequential improvement in sales and transactions.

Negative Factors

Cash Flow and Financial Health

There are concerns with the direction of operating and free cash flow.

Competitive Challenges

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

Sales Trends and Competition

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

$1.66B

Dividend Yield3.63%

Average Volume (3M)1.27M

Price to Earnings (P/E)21.4

Beta (1Y)0.87

Revenue Growth-2.77%

EPS Growth4.01%

CountryUS

Employees11,400

SectorConsumer Cyclical

Sector Strength57

IndustryRestaurants

Share Statistics

EPS (TTM)0.36

Shares Outstanding32,738,434

10 Day Avg. Volume1,692,743

30 Day Avg. Volume1,265,588

Financial Highlights & Ratios

PEG Ratio-0.99

Price to Book (P/B)-10.41

Price to Sales (P/S)0.00

P/FCF Ratio75.61

Enterprise Value/Market Cap1.52

Enterprise Value/Revenue0.30

Enterprise Value/Gross Profit4.63

Enterprise Value/Ebitda2.74

Forecast

1Y Price Target

$47.33

Price Target Upside-6.13% Downside

Rating ConsensusModerate Buy

Number of Analyst Covering8

Papa John's International Business Overview & Revenue Model

Company DescriptionPapa John's International, Inc. (PZZA) is a leading American pizza restaurant chain, known for its commitment to delivering high-quality pizza using better ingredients. Founded in 1984 and headquartered in Louisville, Kentucky, the company operates and franchises pizza delivery and carryout restaurants globally. Papa John's offers a variety of pizzas, sides, desserts, and beverages, with a focus on fresh dough and premium toppings. It has established itself as a prominent player in the quick-service restaurant sector, with a strong presence in both domestic and international markets.

How the Company Makes MoneyPapa John's makes money primarily through the operation of company-owned restaurants and the franchising of its brand. Revenue streams include sales from company-operated restaurants, franchise royalties, and fees from franchised locations. Franchisees pay an initial franchise fee as well as ongoing royalties based on a percentage of their sales. Additionally, the company earns revenue from sales of food, equipment, and supplies to franchisees through its distribution network. Strategic partnerships, marketing initiatives, and a focus on digital and delivery services further enhance its earning potential, contributing to its overall revenue.

Papa John's International Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q1-2025)

% Change Since: 53.16%|

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 Financial Statement Overview

Summary

Papa John's financials reflect moderate revenue growth but highlight significant financial risk due to high leverage and negative equity. Cash flow shows improvement but remains volatile, necessitating strategic financial management.

Income Statement

Positive

Papa John's shows stable revenue with modest growth over recent years, but profitability margins like Gross Profit and EBIT margins have seen some pressure. The TTM (Trailing-Twelve-Months) revenue growth is slight, and the Net Profit Margin has decreased, indicating challenges in maintaining cost efficiency.

Balance Sheet

Negative

The company is highly leveraged with a negative stockholders' equity, resulting in a negative equity ratio. The Debt-to-Equity ratio is concerning, reflecting financial instability and potential risk. While total assets are increasing, liabilities outpace them, indicating financial strain.

Cash Flow

Neutral

Operating Cash Flow is positive, but Free Cash Flow growth is volatile. The TTM Free Cash Flow shows improvement, but the Free Cash Flow to Net Income ratio suggests limited cash conversion efficiency. Cash flow stability is a concern given the significant debt levels.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
2.06B	2.06B	2.14B	2.10B	2.07B	1.81B
	Gross Profit
542.47M	580.96M	657.07M	390.54M	429.32M	344.20M
	EBIT
153.08M	156.70M	147.14M	109.03M	168.24M	90.25M
	EBITDA
217.79M	226.11M	212.50M	161.06M	217.06M	137.02M
	Net Income Common Stockholders
78.07M	83.49M	82.10M	67.77M	120.02M	57.93M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
44.01M	37.95M	40.59M	47.37M	70.61M	130.20M
	Total Assets
898.09M	888.95M	875.00M	864.23M	885.70M	872.77M
	Total Debt
984.25M	971.13M	965.72M	807.26M	685.50M	513.57M
	Net Debt
940.24M	933.17M	925.13M	759.89M	614.89M	383.37M
	Total Liabilities
1.31B	1.30B	1.32B	1.13B	1.05B	1.14B
	Stockholders Equity
-431.93M	-429.53M	-459.09M	-286.39M	-172.46M	-266.94M
Cash Flow		Free Cash Flow
54.32M	34.15M	116.44M	39.42M	116.12M	150.79M
	Operating Cash Flow
125.98M	106.63M	193.06M	117.81M	184.68M	186.44M
	Investing Cash Flow
-14.28M	-17.35M	-75.12M	-62.79M	-63.51M	-41.07M
	Financing Cash Flow
-95.64M	-91.67M	-124.08M	-76.24M	-180.53M	-43.46M

Papa John's International Technical Analysis

Technical Analysis Sentiment

Positive

Last Price50.42

Price Trends

50DMA

38.89

Positive

100DMA

40.95

Positive

200DMA

43.78

Positive

Market Momentum

MACD

3.27

Negative

RSI

68.94

Neutral

STOCH

58.71

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 50.42 is above the 20-day moving average (MA) of 45.67, above the 50-day MA of 38.89, and above the 200-day MA of 43.78, indicating a bullish trend. The MACD of 3.27 indicates Negative momentum. The RSI at 68.94 is Neutral, neither overbought nor oversold. The STOCH value of 58.71 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
TXRH	76 Outperform	$12.46B	28.96	33.55%	1.46%	15.09%	31.24%
WING	71 Outperform	$10.63B	63.92	-16.09%	0.30%	30.98%	112.65%
DPZ	66 Neutral	$15.44B	25.92	-14.74%	1.54%	4.28%	13.76%
WEN	66 Neutral	$2.20B	12.25	90.40%	4.90%	2.18%	-5.15%
YUM	66 Neutral	$40.02B	28.71	-19.43%	1.97%	10.09%	-11.50%
PZZA	65 Neutral	$1.66B	21.36	-20.16%	3.63%	-2.77%	4.01%
Sector *	62 Neutral	$6.90B	11.05	2.80%	4.27%	2.67%	-24.92%

* Consumer Cyclical Sector Average

Performance Comparison

PZZA

Papa John's International

50.42

3.70

7.92%

DPZ

Domino's Pizza

452.15

-72.13

-13.76%

TXRH

Texas Roadhouse

182.29

13.11

7.75%

WEN

Wendy's

11.18

-4.51

-28.74%

YUM

Yum! Brands

144.00

9.71

7.23%

WING

Wingstop

354.06

-61.81

-14.86%

Papa John's International Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

Papa John’s Appoints New Chief Administrative Officer

Positive

Jun 5, 2025

On June 5, 2025, Papa John’s International announced the promotion of Caroline Miller Oyler to the newly created role of Chief Administrative Officer. In her expanded role, Ms. Oyler will oversee several departments, including human resources, legal, and risk, aiming to enhance efficiency and collaboration across teams. This strategic move is part of Papa John’s ongoing transformation for long-term growth, leveraging Ms. Oyler’s extensive experience and leadership within the company.

The most recent analyst rating on (PZZA) stock is a Hold with a $42.00 price target. To see the full list of analyst forecasts on Papa John’s International stock, see the PZZA Stock Forecast page.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.