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Why Pizza Companies’ Stock Prices Are Struggling

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Pizza companies

In this series, we’ll be looking at the key financial indicators of pizza companies Papa John’s (PZZA), Domino’s Pizza (DPZ), and Yum! Brands (YUM) in 3Q17. We’ll also be covering analysts’ estimates for the next four quarters and management’s guidance for 2018.

Finally, we’ll wrap this series up by looking at the companies’ valuation multiples and analysts’ recommendations.

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Stock performance

Since the companies’ announcements of their 3Q17 earnings, only Yum! Brands has seen positive returns, while the stock prices of both Papa John’s and Dominos’ have fallen.

In 3Q17, YUM posted adjusted EPS (earnings per share) of $0.68 on revenue of $1.44 billion. Analysts had expected the company to post EPS of $0.67 on revenue of $1.39 billion. The company also outperformed analysts’ SSSG (same-store sales growth) estimates of 1.7% by posting systemwide SSSG of 3.0%. This strong performance appears to have increased investors’ confidence, raising YUM’s stock price. On December 26, 2017, YUM was trading at $82.19, a rise of 10.6% since its announcement of its 3Q17 earnings on November 1, 2017.

YUM is followed by Domino’s, whose stock price has fallen 5.3% since the announcement of its 3Q17 earnings. Although Domino’s outperformed analysts’ revenue and EPS estimates in 3Q17, the company’s stock fell due to the deacceleration of SSSG (same-store sales growth) in its domestic company-owned restaurants.

Since the announcement of its 3Q17 earnings on October 31, 2017, Papa John’s (PZZA) has seen its stock price fall 16.4%. Although Papa John’s met analysts’ expectations in 3Q17, its stock price fell due to its management’s lowering of its 2017 guidance.

Year-to-date performance

2017 has been a good year for Yum! Brands and Domino’s, with their stock prices having risen 30.1% and 21.1%, respectively. During the same period, Papa John’s stock price has fallen 33.5%.

Next, we’ll look at these pizza companies’ 3Q17 revenues.

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