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Papa John's (PZZA) Q3 Earnings Beat Estimates, Increase Y/Y

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Papa John’s International, Inc. PZZA reported solid third-quarter fiscal 2020 results, wherein earnings and revenues not only beat the Zacks Consensus Estimate but also grew on a year-over-year basis. Following the announcement, shares of the company surged 8.1% during trading hours on Nov 5.

Adjusted earnings of 35 cents per share surpassed the Zacks Consensus Estimate of 32 cents by 9.4% and increased 420% year over year. In the prior-year quarter, the company reported adjusted loss of 7 cents per share.

During the fiscal third quarter, total revenues of $472.9 million surpassed the Zacks Consensus Estimate of $467 million by 1.3%. Moreover, the top line grew 17.1% on a year-over-year basis. Notably, the upside can be attributed to strong comparable sales in North America, higher franchise royalties and commissary revenues.

Papa Johns International, Inc. Price, Consensus and EPS Surprise

 

Papa Johns International, Inc. Price, Consensus and EPS Surprise
Papa Johns International, Inc. Price, Consensus and EPS Surprise

Papa Johns International, Inc. price-consensus-eps-surprise-chart | Papa Johns International, Inc. Quote

Global Restaurant Sales & Comps

In the fiscal third quarter, global restaurant sales rose 21.6% compared with 2.3% growth reported in the prior-year quarter. Excluding foreign currency impact, global restaurant sales rose 22.1% compared with 3.3% growth in the year-ago quarter.

Domestic company-owned restaurant comps moved up 18.2% in the reported quarter compared with 2.2% growth in the year-ago quarter.

At North America franchised restaurants, comps rose 25.6% compared with 0.6% growth in the year-ago quarter. Also, comps at system-wide North America restaurants improved 23.8% compared with 1% growth in the year-ago quarter

Comps at system-wide international restaurants were up 20.7% compared with 1.6% growth in the prior-year quarter.

Operating Highlights

Total operating income in the fiscal third quarter was $24.5 million compared with $4.9 million in the year-ago quarter. Total costs and expenses amounted to $448.4 million, up 12% from the prior-year quarter.

Balance Sheet

As of Sep 27, 2020, cash and cash equivalents totaled $140.1 million compared with $27.9 million as on Dec 29, 2019. Long-term debt was $328.1 million at the end of third-quarter fiscal 2020 compared with $347.3 million at 2019-end.

Inventories at the end of the reported quarter increased to $28.7 million from $27.5 million on Dec 29, 2019. Free cash flow for the nine months ended Sep 27, 2020, totaled $134 million compared with $15.8 million in the year-ago period.

The company paid out common and preferred stock dividends worth $10.8 million in the fiscal third-quarter 2020 and announced fourth-quarter 2020 dividends of approximately $10.8 million. The fourth-quarter dividend will be payable to common shareholders on Nov 20, 2020, while the preferred dividends will be paid on Jan 4, 2021. Meanwhile, the company launched a new share repurchase program worth $75 million, effective through Dec 31, 2021.

Unit Developments

During the fiscal third quarter, Papa John’s opened 14 new restaurants in North America and exited 12. In international markets, the company opened 40 new restaurants and exited 29. As of Sep 27, the company had a global restaurant count of 5,360, thereby operating in 48 countries and territories worldwide.

Meanwhile, the company had approximately 1,380 restaurants (180 units in North America and 1,200 units internationally) in the development pipeline. Majority of the restaurants are scheduled to open over the next six years. This also includes 49 stores in Philadelphia and southern New Jersey, which are likely to open between 2021 and 2028.

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 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same space include Brinker International, Inc. EAT, Chuy's Holdings, Inc. CHUY and Fiesta Restaurant Group, Inc. FRGI. Brinker and Chuy's Holdings sport a Zacks Rank #1, while Fiesta Restaurant carries a Zacks Rank #2 (Buy).

Brinker has a three-five-year earnings per share growth rate of 33.6%.

Chuy's Holdings has a trailing four-quarter earnings surprise of 87.3%, on average.

Fiesta Restaurant’s 2021 earnings are expected to surge 260.7%.

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Brinker International, Inc. (EAT) : Free Stock Analysis Report
 
Papa Johns International, Inc. (PZZA) : Free Stock Analysis Report
 
Chuys Holdings, Inc. (CHUY) : Free Stock Analysis Report
 
Fiesta Restaurant Group, Inc. (FRGI) : Free Stock Analysis Report
 
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