Why Papa John’s Stock Has Downward Momentum
On August 1, Papa John’s (PZZA) announced its 2Q17 earnings. The company registered adjusted EPS (earnings per share) of $0.65 on revenue of $ 434.7 million. Analysts were expecting the company to post EPS of $0.63 on revenue of $439 million. The better-than-expected 2Q17 earnings led Papa John’s stock price to rise to $79.30 by the end of August 7. However, since then, the company’s stock price has seen downward momentum.
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As of September 22, Papa John’s was trading at $72.96, which represents a fall of 8.0% since August 7. With fast food and fast-casual restaurants like McDonald’s (MCD), Chipotle Mexican Grill (CMG), and Buffalo Wild Wings (BWLD) beginning to test delivery service, investors expect the pizza companies to lose its dominance in the delivery space. Fear of a decline in sales as customers get more choices has led to Papa John’s stock decline.
You can read a detailed analysis of Papa John’s 2Q17 earnings in Papa John’s Delivers in 2Q17.
For Papa John’s, 2017 has been a tough year. Since the beginning of 2017, the company’s stock price has fallen 16.4%. During the same period, peers Domino’s Pizza (DPZ) and Yum! Brands (YUM) have returned 21.5% and 19.4%, respectively.
Notably, the broader comparative indices—the S&P 500 Index (SPX) and the iShares US Consumer Services ETF (IYC)—have returned 11.8% and 8.5%, respectively. IYC has invested 12.2% of its portfolio in restaurant and travel companies.
In this series, we’ll look at analysts’ revenue and EPS estimates for the next four quarters. We’ll also cover the company’s valuation multiple, analysts’ recommendations, and target price for the next 12 months.
First, let’s start by looking at analysts’ revenue estimates.