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This Actually Drove Papa John’s 4Q16 Earnings

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4Q16 performance

Papa John’s (PZZA) posted an EPS (earnings per share) of $0.88 in 4Q16. Removing special items, the adjusted EPS stood at $0.69, which represents a growth of 11.3% from $0.62 in 4Q15.

Revenue growth and share repurchases in the past 12 months offset the fall in EBIT margins. In 2016, the company has repurchased 2.1 million shares for $122.4 million, and after 4Q16, the company plans to repurchase shares worth $7.4 million. As of February 14, 2017, the company had $129.9 million under its share repurchase program.

Remember, share repurchases reduce the number of shares outstanding, thus boosting a company’s EPS. From the above graph, we can see that the company has outperformed analysts’ estimates in all of the previous five quarters.

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Peer comparisons and outlook

In 4Q16, Yum! Brands (YUM) posted EPS growth of 11%, while analysts expect Domino’s Pizza (DPZ) to post EPS growth of 14.6%.

For 2017, the company management has set the EPS growth guidance to be in the range of 8%–12%. Analysts are expecting the company to post EPS of $2.8, which represents a growth of 9.8%.

Dividends

Papa John’s announced a dividend of $0.2 for 4Q16, which takes the total for 2016 up to $0.78. The company’s 2016 EPS represents a growth of 16.5% from $0.66 in 2016. In 2017, analysts are expecting the company to pay dividends of $8.4, which represents a growth of 8.4% from $0.78 in 2016.

Continue to the next part for a closer look at Papa John’s valuation multiple.

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