Papa John’s: Investors Are Optimistic about Its Q1 Earnings


May. 6 2019, Updated 8:05 a.m. ET

Stock performance

As of May 3, Papa John’s (PZZA) was trading at $53.06—a rise of 27.0% since the announcement of its fourth-quarter earnings on February 26.

On March 5, John Schnatter, Papa John’s founder, announced that he stepped down from the company’s board. He agreed to resolve his lawsuits with the company. On March 22, Papa John’s announced that Shaquille O’Neal, former NBA player, was appointed to the company’s board of directors. The company stated that O’Neal would be investing in nine of Papa John’s restaurants in Atlanta. He will be an ambassador for Papa John’s brand.

On March 13, Papa John’s announced a national partnership with DoorDash to provide a delivery service for more than 1,400 of its restaurants. All of these announcements led to a rise in Papa John’s stock price.

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Year-to-date performance

Since the beginning of this year, Papa John’s has returned 33.3%. During the same period, Yum! Brands (YUM) and Domino’s Pizza (DPZ) have returned 11.7% and 12.8%, respectively. The Consumer Discretionary Select Sector SPDR ETF (XLY), which invests its holdings in restaurant and travel companies, has returned 21.3%.

Valuation multiple

As of May 3, Papa John’s was trading at a forward PE ratio of 43.0x compared to 26.6x at the beginning of this year. The rise in Papa John’s stock price led to a rise in its valuation multiple. On the same day, Yum! Brands and Domino’s Pizza were trading at forward PE ratios of 25.9x and 23.8x, respectively.


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