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Category: Stock Market and Papa John's (PZZA)
Date: 20 July 2020 Stock Price of Papa John's: $91.73 We take a look at the 1st quarter earnings report of their 2020 fiscal year of Papa John's, a pizza franchise group with over 5000 locations in over 45 countries. Revenues for the 1st quarter 2020 topped $409 million, up 2.8% on the previous year.
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Quality is at our core. It’s the foundation we started with, from the first Papa John's pizza that was made in a broom closet in Jeffersonville, IN, to now more than 5,000 locations in 45 countries and territories around the world."
About Papa John's
The secret to success is much like the secret to making a better pizza - the more you put into it, the more you get out of it. Our pizza family is as hungry for perfection today as we were when we first opened our doors more than 30 years ago. And we're driven to be the best at making innovative new products and recipes.
Quality is at our core. It’s the foundation we started with, from the first Papa John's pizza that was made in a broom closet in Jeffersonville, IN, to now more than 5,000 locations in 45 countries and territories around the world.
We don’t use cheap and more processed ingredients. Whether it's our signature sauce, toppings, our original fresh dough, or even the box itself, we invest in our ingredients to ensure that we always give you the finest quality pizza.
For you, it’s not just a better pizza. It’s a family gathering, memorable birthday, work celebration or simply a great meal. It’s our goal to make sure you always have the best ingredients for every occasion.
Quality is at our core. It’s the foundation we started with, from the first Papa John's pizza that was made in a broom closet in Jeffersonville, IN, to now more than 5,000 locations in 45 countries and territories around the world.
We don’t use cheap and more processed ingredients. Whether it's our signature sauce, toppings, our original fresh dough, or even the box itself, we invest in our ingredients to ensure that we always give you the finest quality pizza.
For you, it’s not just a better pizza. It’s a family gathering, memorable birthday, work celebration or simply a great meal. It’s our goal to make sure you always have the best ingredients for every occasion.
Overview of Papa John's 1st quarter 2020 earnings report
- Total Revenues: $409.859 million (up from $398.405 million for the same quarter of the previous year)
- Total Revenues increased by 2.8% over the last 12 months
- Net income: $8.443 million (up from -$1.73 million for the same quarter of the previous year)
- Diluted earnings per share: $0.15 (down from $0.19 for the same quarter of the previous year)
- PE ratio: 151
- Dividend declared: $0.225
- Dividend yield: 0.97%
- Diluted weighted-average shares outstanding: 32.320 million (up from 31.554 million for the same quarter of the previous year)
- Cash and cash equivalents: $36.376 million
- Cash and cash equivalents per share: $1.12
- Cash and cash equivalents makes up 1.22% of Papa John's market capital
- Cash and cash equivalents makes up 5.1% of Papa John's total assets
- Accounts receivable: $77.607 million
- Accounts receivable makes up 10.8% of Papa John's s total assets
- Cash generated from operations for the first 1st quarter of 2020: $33.734 million
- Cash generated from operations per share for first 1 quarter of 2020: $1.04
Papa John's management commentary on their 1st quarter 2020 earnings
LOUISVILLE, Ky.--(BUSINESS WIRE)--May 6, 2020-- Papa John’s International, Inc. (NASDAQ: PZZA) today announced financial results for the first quarter ended March 29, 2020. The company also provided an update on the business impact of the global coronavirus (COVID-19) pandemic.
Rob Lynch, President & CEO said, “Thanks to the tremendous effort of our team members and franchisees, I’m proud to say that Papa John’s has kept its doors open and continued feeding our customers and neighbors in North America and most markets during the COVID-19 pandemic. Guided by the needs of our team members and the communities we serve, we have implemented rigorous additional health and safety measures, including No Contact Delivery, and expanded our health and paid-leave benefits. Our team members and franchisees have also served more than two million free slices of pizza to those on the front lines and in need. As seen in our April North America comparable sales, after the close of the first quarter, unprecedented numbers of families are relying on Papa John’s. We are rising to this challenge, hiring thousands of new team members, safeguarding our supply chain and carefully managing our finances. It's an honor to deliver BETTER INGREDIENTS. BETTER PIZZA. to our new and returning customers, especially in these trying times.”
Rob Lynch, President & CEO said, “Thanks to the tremendous effort of our team members and franchisees, I’m proud to say that Papa John’s has kept its doors open and continued feeding our customers and neighbors in North America and most markets during the COVID-19 pandemic. Guided by the needs of our team members and the communities we serve, we have implemented rigorous additional health and safety measures, including No Contact Delivery, and expanded our health and paid-leave benefits. Our team members and franchisees have also served more than two million free slices of pizza to those on the front lines and in need. As seen in our April North America comparable sales, after the close of the first quarter, unprecedented numbers of families are relying on Papa John’s. We are rising to this challenge, hiring thousands of new team members, safeguarding our supply chain and carefully managing our finances. It's an honor to deliver BETTER INGREDIENTS. BETTER PIZZA. to our new and returning customers, especially in these trying times.”
Update on Impact of COVID-19 on International and North America Markets
The COVID-19 outbreak has presented evolving developments domestically and internationally. The outbreak began to result in disruption in certain of our international markets beginning in January 2020, which negatively impacted our operations in affected locations, including causing temporary closures of franchise locations in China and South Korea. Subsequently, the outbreak was characterized as a pandemic by the World Health Organization on March 11, 2020 and declared a national emergency in the United States during the same timeframe. In response, governments and other authorities around the world have imposed measures to attempt to control the spread of COVID-19, including restrictions on freedom of movement and business operations such as travel bans, social distancing requirements, including limitations on gatherings, shelter-in-place orders and quarantines, and mandated business closures, which have resulted in significant changes in commercial activity and consumer behavior. In addition, the pandemic has resulted in an overall contraction in global economic activity and rising unemployment. We have been in discussions with our major suppliers and currently have not experienced material disruptions in our supply chain.
Our primary focus continues to be the safety of our team members, franchisees, and customers. The company has taken steps to mitigate the impact of the COVID-19 pandemic by implementing extra health and safety measures across our business, including No Contact Delivery and enhanced cleaning and sanitization measures, for the protection of both our customers and team members. We have expanded our corporate employee benefits to include free virtual doctor visits. This is in addition to existing employee benefits of no-cost mental health support and affordable health plan options. In addition, the company is in the process of hiring thousands of team members to help serve our customers.
Of the company’s approximately 2,100 international franchised stores, approximately 375 are temporarily closed, principally in Europe (140 stores), Latin America (130 stores), and the Middle East (95 stores) in accordance with government policies. In China and South Korea, our markets which were impacted the earliest by the COVID-19 outbreak, a limited number of restaurants remain closed. Some international markets are open predominantly for delivery only, such as in the United Kingdom. In North America, substantially all our traditional restaurants remain open and fully operational. A number of non-traditional restaurants located in universities and stadiums are temporarily closed; these non-traditional locations are not significant to our revenues and operating results.
Although March sales in North America were negatively impacted by the cancellation of large gatherings, including major sporting events, our domestic businesses have performed well, as customers and communities rely on us and others in the food delivery industry. The demand for carry-out and delivery across our markets has increased over the past several weeks.
The COVID-19 outbreak has presented evolving developments domestically and internationally. The outbreak began to result in disruption in certain of our international markets beginning in January 2020, which negatively impacted our operations in affected locations, including causing temporary closures of franchise locations in China and South Korea. Subsequently, the outbreak was characterized as a pandemic by the World Health Organization on March 11, 2020 and declared a national emergency in the United States during the same timeframe. In response, governments and other authorities around the world have imposed measures to attempt to control the spread of COVID-19, including restrictions on freedom of movement and business operations such as travel bans, social distancing requirements, including limitations on gatherings, shelter-in-place orders and quarantines, and mandated business closures, which have resulted in significant changes in commercial activity and consumer behavior. In addition, the pandemic has resulted in an overall contraction in global economic activity and rising unemployment. We have been in discussions with our major suppliers and currently have not experienced material disruptions in our supply chain.
Our primary focus continues to be the safety of our team members, franchisees, and customers. The company has taken steps to mitigate the impact of the COVID-19 pandemic by implementing extra health and safety measures across our business, including No Contact Delivery and enhanced cleaning and sanitization measures, for the protection of both our customers and team members. We have expanded our corporate employee benefits to include free virtual doctor visits. This is in addition to existing employee benefits of no-cost mental health support and affordable health plan options. In addition, the company is in the process of hiring thousands of team members to help serve our customers.
Of the company’s approximately 2,100 international franchised stores, approximately 375 are temporarily closed, principally in Europe (140 stores), Latin America (130 stores), and the Middle East (95 stores) in accordance with government policies. In China and South Korea, our markets which were impacted the earliest by the COVID-19 outbreak, a limited number of restaurants remain closed. Some international markets are open predominantly for delivery only, such as in the United Kingdom. In North America, substantially all our traditional restaurants remain open and fully operational. A number of non-traditional restaurants located in universities and stadiums are temporarily closed; these non-traditional locations are not significant to our revenues and operating results.
Although March sales in North America were negatively impacted by the cancellation of large gatherings, including major sporting events, our domestic businesses have performed well, as customers and communities rely on us and others in the food delivery industry. The demand for carry-out and delivery across our markets has increased over the past several weeks.
Papa John's (NASDAQ: PZZA) stock price history
The image below, obtained from Google, shows the stock price history of Papa Johns over the last 5 years. And it's been a ok time for Papa Johns stockholders. 5 years ago the stock was trading at around $78 a stock and its currently trading at $93.65 a stock. That's a pretty average return of 18% provided to Domino's stockholders over the last 5 years.
The stock of Domino's is however trading at a lot closer to its 52 week high of $100.69 than it is to its 52 week low of $28.55 which to us is a clear indication that the short term sentiment and momentum of Papa Johns stock is very positive at this point in time.
The stock of Domino's is however trading at a lot closer to its 52 week high of $100.69 than it is to its 52 week low of $28.55 which to us is a clear indication that the short term sentiment and momentum of Papa Johns stock is very positive at this point in time.
Papa John's (PZZA) stock vs Domino's (DPZ) stock over the last 5 years
The image below shows the stock price performance of Papa John's (PZZA) and Domino's Pizza over the last 5 years. While both these companies are active in the pizza franchise restaurants business their stock price performance over the 5 year period is vastly different. The summary below shows the stock price returns of PZZA and DPZ over the last 5 years
- Papa John's (PZZA) 27.2%
- Domino's Pizza: 241.7%
Recent coverage of Papa John's
The extract below discusses Domino's upcoming earnings release as obtained from Bloomberg.com
Papa John’s International Inc. shares hit an all-time high, a sign the company has recovered from the controversy generated by its former chairman.
The pizza chain’s stock rose as much as 4.3% to $92.58 in New York, surpassing the previous intraday high set in December 2016. The shares have risen about 46% in 2020 -- making Papa John’s a rare instance of restaurant success amid the upheaval of Covid-19. In June, Papa John’s reported a third consecutive month of double-digit growth for same-store sales -- a key metric of restaurant performance. Expansion in North America reached 24% for the five weeks that ended June 28.
“Those are huge numbers,” said Brian Yarbrough, an analyst with Edward Jones. Before Covid-19, pizza chains were seeing monthly same-store sales growth of about 3% to 5%, he said.
The gains show how the company’s fortunes have rapidly shifted following controversies in recent years generated by its founder John Schnatter. These include the use of a racial slur on a conference call, lawsuits with the company and a feud with the NFL over players’ kneeling during the U.S. anthem to protest police brutality against Black people.
Schnatter, who for years served as the company’s chief executive officer and chairman, has said the slur was taken out of context and that he’s the victim of a smear campaign. He has vowed to set the record straight. Schnatter, one of the company’s largest shareholders as of March filings, has since sold more shares and is no longer in the top 10, a spokeswoman for Papa John’s said.
Read the full article here
Papa John’s International Inc. shares hit an all-time high, a sign the company has recovered from the controversy generated by its former chairman.
The pizza chain’s stock rose as much as 4.3% to $92.58 in New York, surpassing the previous intraday high set in December 2016. The shares have risen about 46% in 2020 -- making Papa John’s a rare instance of restaurant success amid the upheaval of Covid-19. In June, Papa John’s reported a third consecutive month of double-digit growth for same-store sales -- a key metric of restaurant performance. Expansion in North America reached 24% for the five weeks that ended June 28.
“Those are huge numbers,” said Brian Yarbrough, an analyst with Edward Jones. Before Covid-19, pizza chains were seeing monthly same-store sales growth of about 3% to 5%, he said.
The gains show how the company’s fortunes have rapidly shifted following controversies in recent years generated by its founder John Schnatter. These include the use of a racial slur on a conference call, lawsuits with the company and a feud with the NFL over players’ kneeling during the U.S. anthem to protest police brutality against Black people.
Schnatter, who for years served as the company’s chief executive officer and chairman, has said the slur was taken out of context and that he’s the victim of a smear campaign. He has vowed to set the record straight. Schnatter, one of the company’s largest shareholders as of March filings, has since sold more shares and is no longer in the top 10, a spokeswoman for Papa John’s said.
Read the full article here
Papa John's (PZZA) latest stock valuation
So what is Papa John's stock worth based on the release of their 1st quarter 2020 earnings report? Based on Papa John's 1st quarter 2020 earnings report our valuation model provides a target price (full value price) at $64.60 a stock. We therefore believe that the stock is overvalued.
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target price (full value price) which in this case is $209.40. Thus we see a good entry point into Papa John's stock at $58.20 or below. We believe that Papa John's stock will pull back strongly in coming weeks and months to levels closer to our target price (full value price).
We therefore rate the stock of Papa John's (PZZA) as a SELL
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target price (full value price) which in this case is $209.40. Thus we see a good entry point into Papa John's stock at $58.20 or below. We believe that Papa John's stock will pull back strongly in coming weeks and months to levels closer to our target price (full value price).
We therefore rate the stock of Papa John's (PZZA) as a SELL
Next earnings release of Papa John's
It is expected that Papa John's will release their 2nd quarter 2020 earnings report in early August 2020