Papa John's (PZZA) Q1 Earnings Miss Estimates, Decline Y/Y
Papa John’s International, Inc. PZZA reported first-quarter 2020 results, wherein earnings and revenues missed the Zacks Consensus Estimate.
Adjusted earnings of 15 cents per share missed the Zacks Consensus Estimate of 40 cents by 62.5%. The bottom line also plunged 21.1% from the year-ago quarter’s reported figure.
Quarterly revenues of $409.9 million missed the consensus mark of $417 million by 1.7%. However, the top line increased 2.9% on a year-over-year basis. The upside can be attributed to positive comparable sales in North America, higher commissary revenues related to increased commodity costs as well as increased marketing fund revenues primarily due to an increase in the national marketing fund contribution rate and higher online revenues.
Papa Johns International Inc Price, Consensus and EPS Surprise
Papa Johns International Inc price-consensus-eps-surprise-chart | Papa Johns International Inc Quote
During the first quarter, Papa John’s opened 16 restaurants in North America and exited 19, with the global restaurant count being 5,378. Currently, the company is operating in 49 countries and territories worldwide.
However, owing to the unprecedented nature of the global crisis, the company has withdrawn its 2020 guidance.
Global Restaurant Sales & Comps
In the first quarter, global restaurant sales moved up 4.3% against the year-ago quarter’s fall of 5.5%. Excluding foreign currency impact, global restaurant sales rose 5.4% against the year-ago quarter’s decline of 3.7%.
Domestic company-owned restaurant comps moved up 6.1% in the reported quarter against a 9% decline in the year-ago quarter.
At North America franchised restaurants, comps rose 5.1% against a decline of 6.1% in first-quarter 2019. Also, comps at system-wide North America restaurants improved 5.3% against a 6.9% decline seen in the year-ago quarter. The company reported its third straight quarter of same-store sales growth in North America.
Comps at system-wide international restaurants were up 2.3% against a decline of 0.1% in the prior-year quarter.
Operating Highlights
Total operating income in the first quarter was $15.5 million compared with $5.5 million in the year-ago quarter. Total costs and expenses amounted to $394.4 million, up 0.4% from the prior-year quarter.
Balance Sheet
As of Mar 29, 2020, cash and cash equivalents totaled $36.4 million compared with $27.9 million as on Dec 29, 2019. Long-term debt was $342.6 million at the end of first-quarter 2020, compared with $347.3 million at 2019-end.
Inventories at the end of the reported quarter increased to $29.8 million from $27.5 million on Dec 29, 2019. Free cash flow at the end of first-quarter 2020 summed $24.4 million compared with $3.1 million in the year-ago quarter.
The company paid out cash dividends worth $10.7 million in first-quarter 2020 and announced second-quarter 2020 cash dividend of approximately $10.7 million. The second-quarter dividend will be payable on May 22, 2020.
Zacks Rank & Key Picks
Papa John's currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.
Some better-ranked stocks in the Retail-Wholesale sector are Sprouts Farmers Market, Inc. SFM, Domino's Pizza, Inc. DPZ and Yum China Holdings, Inc. YUMC. Sprouts Farmers sports a Zacks Rank #1, while Domino's and Yum China carry a Zacks Rank #2 (Buy).
Sprouts Farmers has a three-five year earnings per share growth rate of 3.7%.
Domino's has a trailing four-quarter positive earnings surprise of 12.7%, on average. The company’s earnings beat the Zacks Consensus Estimate in the last four quarters.
Earnings in 2021 for Yum China are expected to surge 79.2%.
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