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Pizza Pizza Royalty Corp. (TSE:PZA)
TSX:PZA
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Pizza Pizza Royalty (PZA) AI Stock Analysis

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TSE:PZA

Pizza Pizza Royalty

(TSX:PZA)

Rating:77Outperform
Price Target:
Pizza Pizza Royalty exhibits overall strong financial health and stability, supported by effective cost management and a robust equity position. The stock's moderate valuation with a high dividend yield is appealing, yet caution is advised due to the high payout ratio and recent sales challenges. Expansion efforts and marketing innovations provide long-term growth potential, but short-term outlook is affected by external economic pressures and declining sales.

Pizza Pizza Royalty (PZA) vs. iShares MSCI Canada ETF (EWC)

Pizza Pizza Royalty Business Overview & Revenue Model

Company DescriptionPizza Pizza Royalty Corp., through its subsidiary, Pizza Pizza Royalty Limited Partnership, owns and franchises quick service restaurants under the Pizza Pizza and Pizza 73 brands in Canada. It also distributes food. As of December 31, 2021, the company had 727 restaurants in the royalty pool. Pizza Pizza Royalty Corp. was founded in 1967 and is headquartered in Toronto, Canada.
How the Company Makes MoneyPizza Pizza Royalty Corp makes money primarily through the collection of royalty fees from its franchisees. The company has established a structure where franchisees pay a percentage of their sales to PZA in exchange for the use of the Pizza Pizza and Pizza 73 brand names, trademarks, and operational systems. This model ensures a steady income stream that is tied to the overall performance of the franchised locations. The company’s revenue is thus directly linked to the sales generated by the restaurants under its brands. Key factors contributing to its earnings include the growth and success of its franchise network, effective brand management, and the continued popularity of its food offerings among consumers.

Pizza Pizza Royalty Earnings Call Summary

Earnings Call Date:Aug 07, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 10, 2025
Earnings Call Sentiment Positive
The earnings call reflected a positive performance with notable growth in same-store sales, innovative marketing strategies, and expansion milestones. However, challenges such as macroeconomic softening, increased administrative expenses, high payout ratios, and tariff-related uncertainties were addressed. Despite these issues, the company is proactive in maintaining its growth momentum.
Q2-2025 Updates
Positive Updates
Same-Store Sales Growth
Pizza Pizza restaurants reported a same-store sales growth of 2.1%, while Pizza 73 reported growth of 2.0% this quarter, driven by increases in guest traffic and average customer check.
Royalty Pool System Sales Increase
Royalty Pool System sales for the quarter increased by 3.9% to $161.4 million, with Pizza Pizza restaurants increasing by 4.1% to $139.3 million and Pizza 73 by 2.4% to $22 million.
Expansion Milestone
Pizza Pizza achieved a milestone with a total of 800 locations in Canada, including 696 Pizza Pizza sites and 104 Pizza 73 sites.
Innovative Marketing and Promotions
Successful marketing initiatives such as the Score A Slice program, partnerships with NHL teams, and new menu innovations like Stuffed Crust Pizza and signature wraps contributed to growth.
Growth in Organic Delivery Channel
There was a reported increase in the organic delivery channel, aided by game-day promotions and app incentives.
Negative Updates
Macroeconomic Concerns
The Canadian economy shows signs of continued softening, possibly affecting consumer spending and posing challenges to the QSR industry.
Increased Partnership Expenses
Administrative expenses increased to $283,000 from $194,000 in the prior quarter, due to nonrecurring professional fees and onboarding of new directors.
High Payout Ratio
The payout ratio was 108%, resulting in the use of $400,000 from working capital reserves, which may indicate pressure on dividend sustainability.
Tariff and Construction Cost Challenges
Uncertainty around tariffs and construction costs, especially concerning ovens from the U.S., could impact the planned network expansion.
Company Guidance
During the second quarter of 2025, Pizza Pizza Royalty Corp. reported a same-store sales growth of 2.1%, with Pizza Pizza restaurants growing by 2.1% and Pizza 73 restaurants by 2.0%. The quarter saw an increase in guest traffic and average customer check, driven by strategic marketing initiatives and new product launches. The company's organic delivery channel also grew, contributing to the increase in average check size. Royalty Pool system sales rose by 3.9% to $161.4 million, with Pizza Pizza restaurants accounting for $139.3 million, a 4.1% increase, and Pizza 73 restaurants at $22 million, a 2.4% rise. The partnership's royalty income increased by 3.8% to $10.3 million. The company ended the quarter with 800 locations in Canada, reflecting a strategic expansion plan aimed at increasing its restaurant network by approximately 2% to 3% in the second half of 2025. Despite an uncertain macroeconomic environment, the company remains proactive, focusing on value messaging, promotions, and digital investments to sustain growth.

Pizza Pizza Royalty Financial Statement Overview

Summary
Pizza Pizza Royalty showcases strong financial health with robust profitability and efficient cash flow management. Despite minor revenue fluctuations, the company maintains low leverage and a high equity position, reflecting financial stability and operational efficiency.
Income Statement
85
Very Positive
Pizza Pizza Royalty demonstrates strong profitability with consistent gross profit margins at 100% due to its royalty business model. The net profit margin has remained robust at approximately 78% in 2024. Revenue has shown resilience with a slight decrease of 1.02% in 2024 compared to 2023, following a notable growth from 2021 to 2023. EBIT and EBITDA margins are exceptionally high, indicating effective cost management. Overall, the company showcases stable profitability despite minor revenue fluctuations.
Balance Sheet
80
Positive
The company exhibits a strong equity position with an equity ratio of 79.8% in 2024, reflecting financial stability. The debt-to-equity ratio remains low at 0.16, indicating a conservative approach to leverage. Return on equity is impressive at 10.38%, showcasing efficient use of shareholder capital. Overall, Pizza Pizza Royalty maintains a healthy balance sheet with low leverage risk and strong equity support.
Cash Flow
78
Positive
Cash flow from operations remains healthy, closely matching net income, which reflects strong cash generation capability. Free cash flow remains stable, with a slight decline in growth due to reduced revenue. The operating cash flow to net income ratio is above 1, indicating efficient cash conversion. While free cash flow aligns well with net income, the absence of capex suggests a focus on maintaining existing operations. Overall, cash flow stability supports operational needs and shareholder returns.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue40.37M39.81M40.22M36.43M31.92M31.79M
Gross Profit40.37M39.81M40.22M36.43M31.92M31.79M
EBITDA39.82M39.48M36.23M35.88M31.36M31.66M
Net Income31.21M30.97M30.98M27.55M23.92M24.47M
Balance Sheet
Total Assets379.12M373.75M370.09M367.83M363.06M361.55M
Cash, Cash Equivalents and Short-Term Investments5.13M5.78M8.51M7.94M6.16M5.00M
Total Debt46.92M46.99M46.98M46.96M46.94M46.92M
Total Liabilities76.09M75.53M76.18M75.41M72.83M73.14M
Stockholders Equity303.03M298.22M293.91M292.42M290.23M288.40M
Cash Flow
Free Cash Flow32.29M30.80M31.35M28.99M24.75M25.19M
Operating Cash Flow32.29M30.80M31.35M28.99M24.75M25.19M
Investing Cash Flow-500.00K1.00M0.00-2.50M-750.00K0.00
Financing Cash Flow-33.63M-33.52M-30.78M-27.21M-23.60M-23.47M

Pizza Pizza Royalty Technical Analysis

Technical Analysis Sentiment
Positive
Last Price16.28
Price Trends
50DMA
15.61
Positive
100DMA
14.88
Positive
200DMA
13.81
Positive
Market Momentum
MACD
0.21
Positive
RSI
60.94
Neutral
STOCH
68.33
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:PZA, the sentiment is Positive. The current price of 16.28 is above the 20-day moving average (MA) of 16.14, above the 50-day MA of 15.61, and above the 200-day MA of 13.81, indicating a bullish trend. The MACD of 0.21 indicates Positive momentum. The RSI at 60.94 is Neutral, neither overbought nor oversold. The STOCH value of 68.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:PZA.

Pizza Pizza Royalty Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
$545.00M17.3510.14%5.71%-0.26%-2.48%
61
Neutral
$17.78B13.97-5.40%3.03%1.50%-15.71%
$28.54B23.8127.00%3.81%
73
Outperform
C$40.06B23.9024.42%3.80%25.29%-22.90%
45
Neutral
C$19.69M
-2.40%9.13%
C$29.00M6.84%
$645.53M23.894.59%3.24%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:PZA
Pizza Pizza Royalty
16.28
4.32
36.10%
QSR
Restaurant Brands International
63.05
-3.99
-5.95%
TSE:ODD
Odd Burger Corporation
0.20
0.06
42.86%
TSE:QSP.UN
Restaurant BrndLP
87.02
-3.54
-3.91%
TSE:AEG
Aegis Brands
0.34
-0.06
-15.00%
MTYFF
MTY Food Group
27.94
-2.73
-8.90%

Pizza Pizza Royalty Corporate Events

DividendsBusiness Operations and StrategyFinancial Disclosures
Pizza Pizza Royalty Corp. Reports 2024 Financial Results Amid Expansion
Neutral
Mar 31, 2025

Pizza Pizza Royalty Corp. reported a decrease in same-store sales and royalty pool sales for both the fourth quarter and the full year of 2024, attributed to challenging economic conditions and increased competition. Despite these declines, the company expanded its restaurant network by 23 net locations in 2024, with 48 new restaurants opened, and continued to leverage its value-oriented offerings to attract customers. The company declared increased dividends for the year, reflecting its commitment to maximizing shareholder returns, despite a higher payout ratio compared to the previous year.

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.Date of analysis: Apr 07, 2025