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Papa John’s Valuation Multiple Compared to Its Peers

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Valuation multiple

The optimism surrounding Papa John’s (PZZA) initiatives to drive its sales appears to have increased investors’ confidence, which led to a rise in the stock price and valuation multiple. As of March 5, Papa John’s was trading at a forward PE ratio of 38.8x—compared to 32.6x before the announcement of its fourth-quarter earnings. On the same day, Yum! Brands (YUM) and Domino’s Pizza (DPZ) were trading at forward PE ratios of 24.3x and 25.8x, respectively.

Papa John’s is trading at 41.3x analysts’ 2019 EPS of $1.10 and at 28.1x analysts’ 2020 EPS estimate of $1.62. The company’s EPS is expected to fall 17.6% in 2019 and rise 47.1% in 2020.

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Analysts’ recommendations

Among the seven analysts that follow Papa John’s, 57.1% recommended a “buy,” 28.6% recommended a “hold,” and 14.3% recommended a “sell.” Analysts’ average 12-month target price is $51.80, which represents an upside potential of 13.7% from its closing price of $45.56 on March 5.

Peer comparisons

Among the 22 analysts that cover Domino’s Pizza (DPZ), 63.6% recommended a “buy,” while 36.4% recommended a “hold.” Analysts have set an average 12-month target price of $290.25, which implies a return potential of 16.4% from the closing price of $249.33 on March 5.

Among the 22 analysts following Yum! Brands (YUM), 40.9% recommended a “buy,” 54.5% recommended a “hold,” and 4.5% recommended a “sell.” Analysts’ average target price is $97.65, which implies a return potential of 1.8% from its closing price of $95.93 on March 5.

Next, we’ll discuss analysts’ revenue estimates for 2019.

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