Earnings Update: Papa John's International, Inc. (NASDAQ:PZZA) Just Reported Its Full-Year Results And Analysts Are Updating Their Forecasts
Papa John's International, Inc. (NASDAQ:PZZA) shareholders are probably feeling a little disappointed, since its shares fell 2.6% to US$69.94 in the week after its latest yearly results. Papa John's International reported US$2.1b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$2.48 beat expectations, being 3.5% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Check out our latest analysis for Papa John's International
Taking into account the latest results, the most recent consensus for Papa John's International from 16 analysts is for revenues of US$2.19b in 2024. If met, it would imply a modest 2.8% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to increase 4.9% to US$2.63. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.22b and earnings per share (EPS) of US$2.77 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
The consensus price target held steady at US$82.00, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Papa John's International analyst has a price target of US$97.00 per share, while the most pessimistic values it at US$65.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Papa John's International's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 2.8% growth on an annualised basis. This is compared to a historical growth rate of 6.9% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.5% per year. Factoring in the forecast slowdown in growth, it seems obvious that Papa John's International is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Papa John's International. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Papa John's International. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Papa John's International going out to 2026, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Papa John's International , and understanding this should be part of your investment process.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
