Pizza Pizza Royalty Corp. (TSE:PZA)
TSX:PZA
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Pizza Pizza Royalty
(TSX:PZA)
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Rating:69Neutral
Price Target:
C$16.50
▲(3.45% Upside)
Action:DowngradedDate:03/27/26
The score is driven primarily by solid financial performance (high reported margins, conservative leverage, strong cash conversion). Offsetting that strength are weak-to-neutral technicals (price below major moving averages) and a cautious earnings outlook featuring macro pressure, higher interest costs, and a payout ratio above target; valuation is supportive due to the high dividend yield and moderate P/E.
Positive Factors
Conservative leverage and stable balance sheet
Debt-to-equity near 0.16 and a stable equity base give the company durable financial flexibility and lower default risk. This conservative structure supports continued dividend funding and selective reinvestment even if system sales moderate, preserving runway for 2–6 months of execution.
Negative Factors
Payout ratio above target and reserve drawdown
Running a payout above target and cutting the working-capital reserve reduces the cash buffer that cushions revenue volatility. With royalties tied to sales, a near-100% payout leaves limited ability to absorb continued transactional softness or invest opportunistically without rebuilding reserves or reducing distributions.
Read all positive and negative factors
Positive Factors
Negative Factors
Conservative leverage and stable balance sheet
Debt-to-equity near 0.16 and a stable equity base give the company durable financial flexibility and lower default risk. This conservative structure supports continued dividend funding and selective reinvestment even if system sales moderate, preserving runway for 2–6 months of execution.
Read all positive factors
Pizza Pizza Royalty (PZA) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$510.31M
Dividend Yield5.98%
Average Volume (3M)36.42K
Price to Earnings (P/E)16.6
Beta (1Y)0.62
Revenue Growth1.35%
EPS Growth-1.11%
CountryCA
Employees1,325
SectorConsumer Cyclical
Sector Strength84
IndustryRestaurants
Share Statistics
EPS (TTM)0.24
Shares Outstanding24,618,393
10 Day Avg. Volume30,964
30 Day Avg. Volume36,420
Financial Highlights & Ratios
PEG Ratio0.00
Price to Book (P/B)1.73
Price to Sales (P/S)12.76
P/FCF Ratio16.46
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.97
Revenue Forecast (FY)C$650.00M
Pizza Pizza Royalty Business Overview & Revenue Model
Company Description
Pizza 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 c...
How the Company Makes Money
Pizza Pizza Royalty Corp. makes money primarily by collecting royalties calculated as a percentage of the top-line sales (system sales) generated by the Pizza Pizza and Pizza 73 restaurant systems in Canada. These royalty payments are typically re...
Pizza Pizza Royalty Earnings Call Summary
Earnings Call Date:Mar 25, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Neutral
The call presented a balanced picture: operational resilience and modest growth (royalty income +2.3%, FY same-store gains, continued expansion, digital and marketing momentum) were offset by meaningful macro and cost pressures (weaker transactions, higher financing costs, payout ratio above target and reserve drawdown). Management emphasized disciplined growth and investments in digital/loyalty to drive frequency, but acknowledged ongoing headwinds and uncertainty.Positive Updates
Modest Same-Store Sales Growth for the Year
For fiscal 2025 the restaurant system delivered positive same-store sales with Pizza Pizza up 0.7% and Pizza 73 up 1.9%; combined same-store sales for Q4 increased 0.2%.
Negative Updates
Softening Transactions and Consumer Caution
Despite some same-store sales gains, both brands saw decreased transactions amid heightened competition and reduced consumer spending as the macro environment deteriorated, with management expecting continued headwinds.
Read all updates
Q4-2025 Updates
Positive
Negative
Modest Same-Store Sales Growth for the Year
For fiscal 2025 the restaurant system delivered positive same-store sales with Pizza Pizza up 0.7% and Pizza 73 up 1.9%; combined same-store sales for Q4 increased 0.2%.
Read all positive updates
Company Guidance
The company said it expects near‑term headwinds—low consumer confidence, rising costs and tougher competition—but will take a disciplined approach to store growth and invest in its digital ecosystem (website, mobile apps and loyalty relaunch planned for 2026) to drive frequency and check. Key metrics underpinning that guidance include a target payout ratio near 100% annualized (quarterly dividend declared $5.7M or $0.2325/share; quarter payout ratio 105%; working capital reserve $3.7M, down $300k), a royalty pool that increased by 20 restaurants to 794 in fiscal 2025 (694 Pizza Pizza, 100 Pizza 73), system locations of 815 at year‑end (712 Pizza Pizza, 103 Pizza 73, 4 international) after opening 37 restaurants in 2025 (12 traditional, 20 non‑traditional Pizza Pizza, 5 Pizza 73) and closing 19 locations, same‑store sales of +0.7% for Pizza Pizza and +1.9% for Pizza 73 for the full year (Q4 combined +0.2%; Pizza Pizza -0.1%, Pizza 73 +1.8%), royalty income up 2.3% to $10.6M in the quarter, interest income $31K, administrative expenses $211K (vs $221K prior year), interest paid $443K on a $47M credit facility renewed to April 2028, and hedging that locks a 2.51% swap (all‑in facility rate ~3.51% vs prior 2.685%), with management noting they will be selective on real estate and unit economics (including construction cost mitigation and potentially smaller formats) as they navigate the uncertain environment.Pizza Pizza Royalty Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
80
Positive
Cash Flow
78
Positive
| Breakdown | Dec 2025 | Mar 2025 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 40.79M | 39.81M | 40.22M | 36.43M | 31.92M |
| Gross Profit | 40.79M | 39.81M | 40.22M | 36.43M | 31.92M |
| EBITDA | 39.96M | 39.48M | 36.23M | 35.88M | 31.36M |
| Net Income | 31.34M | 30.97M | 30.98M | 27.55M | 23.92M |
Balance Sheet | |||||
| Total Assets | 377.10M | 373.75M | 370.09M | 367.83M | 363.06M |
| Cash, Cash Equivalents and Short-Term Investments | 3.58M | 5.78M | 8.51M | 7.94M | 6.16M |
| Total Debt | 46.74M | 46.99M | 46.98M | 46.96M | 46.94M |
| Total Liabilities | 75.61M | 75.53M | 76.18M | 75.41M | 72.83M |
| Stockholders Equity | 301.49M | 298.22M | 293.91M | 292.42M | 290.23M |
Cash Flow | |||||
| Free Cash Flow | 31.64M | 30.80M | 31.35M | 28.99M | 24.75M |
| Operating Cash Flow | 31.64M | 30.80M | 31.35M | 28.99M | 24.75M |
| Investing Cash Flow | 2.00M | 1.00M | 0.00 | -2.50M | -750.00K |
| Financing Cash Flow | -33.83M | -33.52M | -30.78M | -27.21M | -23.60M |
Pizza Pizza Royalty Technical Analysis
Negative
15.95
Price Trends
15.94
Negative
15.51
Negative
15.28
Positive
Market Momentum
-0.23
Positive
41.68
Neutral
27.90
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:PZA, the sentiment is Negative. The current price of 15.95 is above the 20-day moving average (MA) of 15.63, above the 50-day MA of 15.94, and above the 200-day MA of 15.28, indicating a neutral trend. The MACD of -0.23 indicates Positive momentum. The RSI at 41.68 is Neutral, neither overbought nor oversold. The STOCH value of 27.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:PZA.
Pizza Pizza Royalty Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | C$510.31M | 16.62 | 10.35% | 5.98% | 1.35% | -1.11% | |
67 Neutral | C$890.13M | 7.28 | 3.64% | 3.51% | 1.38% | -64.10% | |
62 Neutral | C$894.26M | 16.42 | 27.32% | 5.07% | -2.54% | -10.57% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
43 Neutral | C$3.45M | -33.28 | ― | ― | -2.40% | 9.13% | |
43 Neutral | C$19.16M | -2.15 | 32.72% | ― | -20.91% | -109.64% |
* Consumer Cyclical Sector Average
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15.30
3.12
25.58%
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Pizza Pizza Royalty Corporate Events
Business Operations and StrategyDividendsFinancial Disclosures
Pizza Pizza Royalty posts modest 2025 sales gains, holds dividend amid softer traffic
Neutral
Mar 26, 2026
Pizza Pizza Royalty Corp. reported modest growth for the fourth quarter and full year 2025, with Royalty Pool system sales up 2.2% in the quarter and 2.4% for the year, driven by slight same-store sales gains and network expansion. Same-store sale...
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.