Papa John's (PZZA) Q3 Earnings & Revenues Miss Estimates
Papa John’s International, Inc. PZZA reported third-quarter fiscal 2022 results, with earnings and revenues missing the Zacks Consensus Estimate. Both top and bottom lines also declined year over year.
The company’s results in the quarter were negatively impacted by high commodity and labor costs. The company expects near-term headwinds to continue.
Earnings & Revenue Discussion
During the fiscal third quarter, the company reported adjusted earnings per share (EPS) of 54 cents, missing the Zacks Consensus Estimate of 59 cents. In the prior-year quarter, the company had reported adjusted EPS of 83 cents.
Papa John's International, Inc. Price, Consensus and EPS Surprise
Papa John's International, Inc. price-consensus-eps-surprise-chart | Papa John's International, Inc. Quote
Quarterly revenues of $510.5 million missed the consensus mark of $511 million by 0.1%. Moreover, the top line decreased 0.4% on a year-over-year basis.
Global Restaurant Sales & Comps
In the fiscal third quarter, total comparable sales fell 3.4% year over year against 7.3% growth reported in the prior-year quarter. Domestic company-owned restaurant comps in the quarter under review declined 2.2% year over year against a rise of 7.4% reported in the year-ago quarter.
At North America franchised restaurants, comps dropped 0.5% year over year compared with 6.8% growth reported in the year-ago quarter. Comps at North America restaurants increased 0.8% year over year compared with 6.9% growth in the year-ago quarter. Comps at international restaurants were down 10.1% year over year against growth of 8.3% reported in the prior-year quarter.
During the fiscal third quarter, total global system-wide restaurant sales growth came in at 0.5% year over year compared with an 11.2% rise reported in the prior-year quarter.
Operating Highlights
Adjusted operating income in the fiscal third quarter totaled $33.6 million compared with $40.7 million reported in the year-ago quarter. During the quarter under review, total costs and expenses amounted to $490.1 million, up 3.4% from the prior-year quarter.
Balance Sheet
As of Sep 25, 2022, cash and cash equivalents totaled $36.6 million compared with $70.6 million as of Dec 26, 2021. At the end of the fiscal third quarter, long-term debt (less current portion) totaled $548.8 million compared with $480.7 million at the end of the first quarter of fiscal 2022.
Inventories as of Sep 25, 2022, were $42.4 million compared with $35 million on Dec 26, 2021. Free cash flow (for the nine months ended Sep 25, 2022) totaled $28.1 million compared with $145.9 million reported in the prior year period.
During the quarter under review, the company repurchased 229,000 shares with an aggregate cost of $19.5 million. As of Sep 25, the company stated the availability of approximately $329.8 million under its repurchase program.
Unit Developments
During the fiscal third quarter, Papa John’s opened two net new restaurants in North America. In the international markets, the company opened 16 net new restaurants. As of Sep 25, the company had a global restaurant count of 5,589, with operations in 47 countries and territories worldwide.
Zacks Rank & Key Picks
Papa John’s currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Zacks Retail – Restaurants industry are Potbelly Corporation PBPB, Wingstop Inc. WING and Chipotle Mexican Grill, Inc. CMG.
Potbelly currently sports a Zacks Rank #1 (Strong Buy). PBPB has a trailing four-quarter earnings surprise of 22.2%, on average. Shares of PBPB have declined 20.6% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Potbelly’s 2022 sales and EPS suggests growth of 17.9% and 101.9%, respectively, from the corresponding year-ago levels.
Wingstop also sports a Zacks Rank #1. WING has a long-term earnings growth rate of 11%. Shares of WING have improved 2.3% in the past year.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 17.1%, respectively, from the comparable year-ago levels.
Chipotle currently carries a Zacks Rank #2 (Buy). CMG has a trailing four-quarter earnings surprise of 4.1%, on average. The stock has declined 16.4% in the past year.
The Zacks Consensus Estimate for Chipotle’s 2022 sales and EPS suggests growth of 15.2% and 30.7%, respectively, from the corresponding year-ago levels.
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