Why Analysts Expect Papa John’s 1Q16 EPS to Rise



Earnings per share

So far in this series, we discussed Papa John’s (PZZA) estimated revenue, revenue sources, and estimated EBITDA (earnings before interest, tax, depreciation, and amortization) margins. Now, let’s discuss analysts’ EPS (earnings per share) estimates and management’s guidance for fiscal 2016.

Why are Analysts Expecting Papa John’s 1Q16 EPS to Rise?

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1Q16 estimates

Papa John’s forms 0.1% of the iShares Core S&P Total US Stock Market ETF (ITOT). It beat analysts’ expectations twice in the last four quarters. When the company beats its estimates, the share price tends to rise. In 1Q16, analysts expect Papa John’s to post EPS of $0.63. This represents growth of 14.5% from $0.55 in 1Q15.

The EPS growth is expected to be driven by revenue growth of 2% and share repurchases in the last 12 months. Share repurchase reduces the number of shares outstanding. It increases the EPS. We’ll discuss share repurchases more in the next part of this series. Also, the expansion of EBITDA margins by 0.1% will contribute to the EPS growth.

Peer comparison

In 1Q16, Yum! Brands (YUM) and Starbucks (SBUX) posted EPS growth of 19.1%. Domino’s Pizza (DPZ) is expected to post EPS growth of 21%.

2016 outlook

With expected revenue expansion of 4%–6%, Papa John’s management set the EPS guidance for 2016 at $2.3–$2.4. Analysts expect the EPS to be $2.4. This represents growth of 13.5%.


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