Pizza Pizza Royalty Corp. (TSE:PZA)
TSX:PZA
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Pizza Pizza Royalty
(TSX:PZA)
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Rating:64Neutral
Price Target:
C$13.50
▼(-15.36% Downside)
Action:Reiterated
Date:05/05/26
The score is driven mainly by solid financial strength (high reported margins and low leverage) but is held back by sharp recent revenue/FCF deterioration and a weak technical setup with the stock trading below key moving averages. Valuation is supported by an attractive dividend yield and moderate P/E, while the latest earnings call reflects near-term sales pressure and an elevated payout ratio despite ongoing growth and product initiatives.
Positive Factors
High Reported Profitability
Reported net margins in the mid-to-high 70% range reflect the structural economics of a royalty model: low operating cost base and high cash conversion. This durable profitability supports the company's ability to fund dividends and absorb moderate sales volatility over the next several months.
Negative Factors
Sharp Recent Revenue Decline
An ~82% TTM revenue drop is a material structural concern because royalty income tracks system sales directly. Prolonged top-line weakness materially reduces royalty receipts, compresses margins after fixed payouts, and undermines the predictability of cash available for dividends and capital management.
Read all positive and negative factors
Positive Factors
Negative Factors
High Reported Profitability
Reported net margins in the mid-to-high 70% range reflect the structural economics of a royalty model: low operating cost base and high cash conversion. This durable profitability supports the company's ability to fund dividends and absorb moderate sales volatility over the next several months.
Read all positive factors
Pizza Pizza Royalty (PZA) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$440.14M
Dividend Yield5.98%
Average Volume (3M)36.42K
Price to Earnings (P/E)14.0
Beta (1Y)0.60
Revenue Growth1.17%
EPS Growth-1.36%
CountryCA
Employees1,100
SectorConsumer Cyclical
Sector Strength84
IndustryRestaurants
Share Statistics
EPS (TTM)0.93
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 Target
C$12.00Price Target Upside-24.76% Downside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)0.91
Revenue Forecast (FY)C$638.00M
Pizza Pizza Royalty Business Overview & Revenue Model
Company Description
Pizza Pizza Royalty Corp., through its subsidiary, Pizza Pizza Royalty Limited Partnership, franchises and operates quick-service restaurants under the Pizza Pizza and Pizza 73 brands in Canada. The company was founded in 1967 and is headquartered...
How the Company Makes Money
Pizza Pizza Royalty Corp. makes money primarily by collecting royalty income based on the sales of the Pizza Pizza and Pizza 73 restaurant systems in Canada. Its core revenue stream is a contractually defined royalty (paid out of a royalty pool) t...
Pizza Pizza Royalty Earnings Call Summary
Earnings Call Date:May 01, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 12, 2026
Earnings Call Sentiment Negative
The call highlighted meaningful progress on footprint expansion, product innovation (including immediate lift from a $5 walk-in deal), maintained dividends, and cost discipline. However, these positives were overshadowed by material top-line weakness: same-store sales down ~4.1%, system sales and royalty income down 3.5%, traffic and delivery softness, nontraditional site challenges, a high quarterly payout ratio of 134% and a draw on working capital, and rising borrowing costs. Given the combination of deteriorating sales metrics and balance-sheet/ payout pressures, the tone reflects concern about near-term performance despite strategic initiatives.Positive Updates
Net Restaurant Growth and Scale
Added 20 net new restaurants to the Royalty Pool on Jan 1, 2026; Royalty Pool increased from 794 to 814 restaurants (712 Pizza Pizza, 102 Pizza 73). Opened 6 traditional and 3 nontraditional Pizza Pizza locations during the quarter, supporting long-term footprint expansion.
Negative Updates
Same-Store Sales Decline
Same-store sales decreased 4.1% in Q1 2026 versus prior year. By brand, Pizza Pizza same-store sales declined ~4.3% and Pizza 73 was weaker (management cited declines of ~2.7% in prepared remarks), reflecting weaker traffic and check dynamics.
Read all updates
Q1-2026 Updates
Positive
Negative
Net Restaurant Growth and Scale
Added 20 net new restaurants to the Royalty Pool on Jan 1, 2026; Royalty Pool increased from 794 to 814 restaurants (712 Pizza Pizza, 102 Pizza 73). Opened 6 traditional and 3 nontraditional Pizza Pizza locations during the quarter, supporting long-term footprint expansion.
Read all positive updates
Company Guidance
The company guided that it expects near‑term headwinds amid low consumer confidence but will focus on controlling costs, product innovation and disciplined growth, targeting roughly 2–3% traditional unit growth in 2026; key metrics cited include a Q1 same‑store sales decline of 4.1% (Pizza Pizza -4.3%, Pizza 73 -2.7%), Royalty Pool system sales down 3.5% to $145.8M (from $151.3M) and royalty income down 3.5% to $9.4M, with the pool now at 814 restaurants (712 Pizza Pizza, 102 Pizza 73) after +20 net new locations (39 added, 19 permanently closed), 6 traditional and 3 nontraditional openings and 1 traditional/1 nontraditional closure; financial items include $5.7M dividends ($0.2325/share) with a Q1 payout ratio of 134% (company targets ~100% annualized), working capital of $2.3M (down $1.4M), interest‑only payments on a $47M credit facility (Q1 interest $435k, new all‑in rate 3.51% vs prior 2.685%), and operational notes such as traditional stores driving ~90% of pool sales (nontraditional ~10%), on‑time delivery <40 minutes guarantee, and menu initiatives (e.g., late‑March $5 slice + drink improving walk‑in sales).Pizza Pizza Royalty Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
78
Positive
Cash Flow
67
Positive
| Breakdown | TTM | Dec 2025 | Mar 2025 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 105.56M | 40.79M | 39.81M | 40.22M | 36.43M | 31.92M |
| Gross Profit | 28.85M | 40.79M | 39.81M | 40.22M | 36.43M | 31.92M |
| EBITDA | 39.77M | 39.96M | 39.48M | 39.95M | 35.88M | 31.36M |
| Net Income | 30.98M | 31.34M | 30.97M | 30.98M | 27.55M | 23.92M |
Balance Sheet | ||||||
| Total Assets | 382.41M | 377.10M | 373.75M | 370.09M | 367.83M | 363.06M |
| Cash, Cash Equivalents and Short-Term Investments | 2.39M | 3.58M | 5.78M | 8.51M | 7.94M | 6.16M |
| Total Debt | 46.77M | 46.74M | 46.99M | 46.98M | 46.96M | 46.94M |
| Total Liabilities | 75.61M | 75.61M | 75.53M | 76.18M | 75.41M | 72.83M |
| Stockholders Equity | 306.80M | 301.49M | 298.22M | 293.91M | 292.42M | 290.23M |
Cash Flow | ||||||
| Free Cash Flow | 31.34M | 31.64M | 30.80M | 31.35M | 28.99M | 24.75M |
| Operating Cash Flow | 31.34M | 31.64M | 30.80M | 31.35M | 28.99M | 24.75M |
| Investing Cash Flow | 3.00M | 2.00M | 1.00M | 0.00 | -2.50M | -750.00K |
| Financing Cash Flow | -34.00M | -33.83M | -33.52M | -30.78M | -27.21M | -23.60M |
Pizza Pizza Royalty Technical Analysis
Negative
15.95
Price Trends
13.76
Negative
14.76
Negative
14.86
Negative
Market Momentum
-0.14
Negative
46.43
Neutral
28.71
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 12.89, above the 50-day MA of 13.76, and above the 200-day MA of 14.86, indicating a neutral trend. The MACD of -0.14 indicates Negative momentum. The RSI at 46.43 is Neutral, neither overbought nor oversold. The STOCH value of 28.71 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$863.18M | 5.62 | 18.59% | 3.51% | 0.63% | 2106.19% | |
64 Neutral | C$440.14M | 14.00 | 10.21% | 5.98% | 1.17% | -1.36% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
55 Neutral | C$872.06M | 15.59 | 25.77% | 5.07% | -0.78% | 313.58% | |
46 Neutral | C$18.41M | -1.38 | 32.72% | ― | -23.24% | -51.96% |
* Consumer Cyclical Sector Average
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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.