Could Papa John’s Price Correction Mean a Buy Opportunity?


Jul. 6 2018, Updated 2:37 p.m. ET

Stock performance

As of July 5, Papa John’s (PZZA) was trading at $51.06, which represents 13.1% fall since the announcement of its first-quarter earnings on May 8. In the first quarter, it reported adjusted EPS of $0.50 against analysts’ estimate of $0.62. It reported revenue of $427.4 million against analysts’ estimate of $438.1 million. Its SSSG (same-store sales growth) declined 5.3% in North America. The lower-than-expected EPS and declining SSSG appear to have made investors skeptical of the company’s future earnings, leading to a fall in the stock.

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Year-to-date performance

In 2017, Papa John’s stock fell 34.4%. Continuing on the downward momentum, it has fallen 9% since the beginning of 2018. It’s trading 3.1% higher than its 52-week low of $49.54 and 37% lower than its 52-week high of $81.09.

Papa John’s peers Domino’s Pizza (DPZ) and Yum! Brands (YUM) have returned 47% and -4.7% year-to-date, respectively. The broader comparative indexes, the S&P 500 Index (SPY) and the Consumer Discretionary Select Sector SPDR ETF (XLY) have returned 2.4% and 10.9%, respectively.

Series overview

In this series, we’ll look at analysts’ revenue and EPS expectations for Papa John’s for the next four quarters. We’ll also look at management’s 2018 guidance. Finally, we’ll look at analysts’ recommendations and the company’s valuation multiple.

Let’s start by looking at analysts’ revenue expectations.


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