Can Papa John’s Maintain Its Impressive 1Q16 Momentum?
Papa John’s International (PZZA) announced its 1Q16 results on May 3, 2016, after the Market closed. The company posted a revenue of $428.6 million and adjusted EPS (earnings per share) of $0.69. Compared to 1Q15, its revenue declined by 0.9%, while its adjusted EPS rose by 20.3%.
However, Papa John’s 1Q16 revenue was lower than analysts’ estimates of $441 million, and its adjusted EPS beat analysts’ estimates of $0.63 by 9.2%. This led to a rise in its share price, which closed at $60.20 on May 4, 2016, up by 8% from previous day’s closing price of $55.60.
Since the beginning of 2016, Papa John’s share price has appreciated by 7.7%. During the same period, the share prices of its peers Domino’s Pizza (DPZ) and YUM! Brands (YUM) have returned 7% and 10.3%, respectively. Starbucks’ (SBUX) share price has declined by 6%.
The share price of the broader comparative index, the Guggenheim S&P 500 Pure Growth ETF (RPG), fell by 3.8% year-to-date. RPG has invested more than 44% of its holding in restaurant and travel companies.
In this series, we’ll discuss the 1Q16 earnings call and notes along with Papa John’s (PZZA) performance on key metrics during the quarter. We’ll also cover the management’s guidance and analysts’ estimates for the rest of 2016 and beyond.
Let’s start by looking at why PZZA’s revenue declined in 1Q16.
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