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Has Papa John’s Stock Bottomed Out?

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Stock performance

As of November 22, 2017, Papa John’s (PZZA) was trading at $57.0—near its 52-week low of $56.71, which the company hit on November 20, 2017. Its stock has fallen 18.0% since the announcement of its 3Q17 earnings on October 31, 2017.

In 3Q17, Papa John’s posted an adjusted EPS (earnings per share) of $0.60 on revenues of $431.7 million—compared to analysts’ EPS estimate of $0.60 on revenues of $426.7 million. After posting its 3Q17 earnings, analysts lowered their 2017 EPS growth guidance to 3.0%–7.0% from the earlier estimate of 8.0%–12.0%. Papa John’s management blamed lower NFL viewership for lowering its EPS guidance. To learn more, read Why Papa John’s 3Q17 Earnings Fail to Impress Analysts.

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YTD performance

With fast food and fast casual companies entering the delivery business, investors expect customers to have more choices. Investors expect pizza companies’ dominance in the delivery space to end. New companies entering the delivery space made investors skeptical about Papa John’s future earnings, which led to a fall in its stock price. Since the beginning of 2017, Papa John’s stock price has fallen 33.4%. During the same period, Domino’s Pizza (DPZ) and Yum! Brands (YUM) have returned 10.9% and 25.1%, respectively.

The S&P 500 Index (SPX) and the Shares U.S. Consumer Services ETF (IYC) have returned 16.0% and 12.8% YTD (year-to-date), respectively. IYC has invested 11.9% of its holdings in restaurant and travel companies.

Series overview

In this series, we’ll discuss analysts’ revenue and EPS expectations for the next four quarters. We’ll also cover Papa John’s valuation multiple and analysts’ recommendations.

In the next part, we’ll discuss analysts’ revenue estimates for the next four quarters.

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