In order to continue the trend of returning wealth to its shareholders, the board of directors of Papa John's International Inc. (PZZA) increased the company’s share repurchase authorization by $100.0 million; to be bought back by Dec 31, 2014. With this announcement, the company currently has $125.7 million available for repurchase.
In the last reported quarter (third quarter of 2013), the company repurchased 0.15 million shares for a total cost of $10.3 million. The share repurchase enabled the company to record an 18.0% year-over-year increase in earnings per share in the third quarter.
In fact, during the period Sep 30, 2013 to Oct 28, 2013, Papa John repurchased 0.074 million shares for $5.26 million. The company had last increased its share repurchase authorization by $25.0 million available through Mar 30, 2014 at its second quarter 2013 earnings call.
The company also returns wealth to shareholders through dividends. The company pays a regular quarterly cash dividend of 25 cents per share, which translates to an annualized dividend of $1.00 per share.
During its third quarter earnings call, the company declared a two-for-one split of the company's outstanding shares of common stock in the form of a stock dividend. The stock dividend will be distributed on Dec 27, 2013. Each shareholder as of Dec 12, 2013 is entitled to receive one additional share for every outstanding share of common stock.
These strategies keep the stock attractive as they demonstrate the company’s growth potential and stable liquidity position. Cash and cash equivalents as of Sep 30, 2013 was $13.7 million, down from $28.2 million as of Jun 30, 2013 due to utilization of cash for share buybacks. However, as of Sep 30, 2013, long-term debt declined to $120.0 million from $133.2 million as of Jun 30, 2013.
Papa John’s holds a Zacks Rank #2 (Buy). Other players in the retail restaurant industry, which look attractive at current levels, include Red Robin Gourmet Burgers Inc. (RRGB), Cracker Barrel Old Country Store, Inc. (CBRL) and Bob Evans Farms, Inc. (BOBE). All these stocks carry the same Zacks Rank as Papa John.
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