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Papa John's Fortifies Presence in Russia with 100th Outlet

Zacks Equity Research

World’s third largest pizza delivery company, Papa John’s International, Inc. PZZA expanded further in Russia with the launch of its 100th outlet in the country. The newest addition is located in St. Petersburg at Maliy Prospekt Vasilievskiy Ostrov, bld. 22, and can accommodate 36 guests.

Russia is one of Papa John’s fastest growing regions and has high potential for further development. In fact, the company added 32 locations in Russia, in the last year. Moreover, it plans to increase the number of restaurants to 150 in Russia by the end of 2017. The brand has been expanding rapidly from Siberia to Central Europe, in addition to Russia. In fact, over the past eight years, the company has witnessed a steady double-digit growth year after year.

Meanwhile, Papa John’s continues to develop its e-commerce business in the region too. As over 75% of all orders are placed online, the company is expected to continue to focus on improvement of its digital customer experience including its website, mobile apps, etc., going ahead.

Notably, international expansion has been the backbone of Papa John’s operations recently. In fact, the fourth quarter of 2016 marked the 28th consecutive quarter of positive comps in the international segment. Currently, the company has more than 1650 international restaurants in 45 countries.

However, owing to its large international presence, Papa John’s is exposed to risks of fluctuations in currency exchange rates, which impacts the company’s top line.

Apart from this, the restaurant industry has also been experiencing low consumption over the last few quarters. Further, increasing competition from other pizza giants like Domino’s Pizza, Inc. DPZ, YUM! Brands, Inc.’s YUM Pizza Hut and Papa Murphy’s Holdings, Inc. FRSH also remains a concern for the company.

Nonetheless, estimates for full-year 2017 have been moving upwards over the last 60 days, testifying to the unwavering confidence that analysts have in the company. Additionally, Papa John’s earnings surpassed the Zacks Consensus Estimate consistently in each of the trailing four quarters, with an average beat of 10.26%. Also, shares of the company have increased 32.6% over the last one year comparing favorably with the Zacks categorized Retail-Restaurants industry’s loss of 5.2%.



Papa John currently carries a Zacks Rank #2 (Buy), which further indicates robust fundamentals and expectations of outperformance in the near term

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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