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Papa John’s Stock Plunges after Its Q2 2018 Earnings Results

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Second-quarter performance

Papa John’s (PZZA) posted its second-quarter earnings results after the market closed on August 7. The company posted adjusted EPS of $0.49 on revenue of $408.0 million. YoY (year-over-year), the company’s EPS fell 24.6%, while its revenue fell 6.2%.

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Stock performance

During the quarter, Papa John’s failed to meet analysts’ EPS expectation of $0.54 and their revenue estimate of $434.8 million. The company’s SSSG (same-store sales growth) for its North American restaurants came in at a fall of 6.1%, lower than analysts’ expectation of a fall of 4.9%.

After posting weak second-quarter earnings results, the company’s management lowered its SSSG, unit growth, and EPS guidances for 2018, a move that appears to have led to a fall in the company’s stock price. Papa John’s was trading 10.5% lower in after-hours trading on August 7.

Year-to-date performance

Since the beginning of 2018, Papa John’s stock price has fallen 26.8%. The company’s stock price was also negatively affected by the ongoing battle between its board and John Schnatter, Papa John’s founder, who stepped down as the chair of the board on July 11 after apologizing for using a racist slur during a media training call.

PZZA’s peers Domino’s Pizza (DPZ) and Yum! Brands (YUM) have returned 46.8% and -0.3%, respectively, YTD (year-to-date). The S&P 500 Index (SPY) and the Consumer Discretionary Select Sector SPDR ETF (XLY) have returned 6.9% and 14.6%, respectively, YTD.

Next, we’ll look at Papa John’s second-quarter revenue.

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