Papa John’s Misses Earnings Estimates; Shares Slip

Papa John’s International delivered lower-than-expected earnings in the fourth quarter. Meanwhile, shares of Papa John’s fell 7.4% in pre-market trading as the company posted earnings per share (EPS) of $0.40 during the fourth quarter, which were behind analysts’ expectations of $0.46.

That said, revenue increased 12.5% year-on-year to $469.8 million, topping analysts’ estimates of $465.7 million. The increase in 4Q revenues was primarily attributable to higher comparable sales for North America restaurants, which saw 10.2% growth in company owned restaurants and 14.5% growth in franchised restaurants. Papa John’s (PZZA) international sales also increased on the back of higher commissary revenues and royalties resulting from comparable sales growth of 21.4%.

For fiscal 2020, the company generated sales of $1.81 billion, up 12% from 2019. Diluted earnings per share came in at $1.40, versus $0.03 in the comparable year-ago period.

Papa John’s President and CEO Rob Lynch said, “4Q was the third consecutive quarter of double-digit comparable sales growth and the sixth straight quarter of positive comparable sales in North America. We ended the year with the launch of Epic Stuffed Crust, the biggest product innovation in the company’s history, and our future is extremely bright.”

In light of ongoing uncertainity about the future impact from the COVID-19 pandemic, Papa John’s did not provide any guidance. (See Papa John’s stock analysis on TipRanks)

On Feb. 23, Deutsche Bank analyst Brian Mullan raised the price target to $110 (7.2% upside potential) from $91 and reiterated a Buy rating. Mullan believes the outlook for Papa John’s shares from here is favorable with a 12-month view.

Turning to Wall Street, Papa John’s has a Strong Buy consensus rating based on 8 Buys and 1 Hold. The average analyst price target of $111.13 implies about 8.3% upside potential from current levels. Papa John’s stock has seen a runup of about 50% over the past year.

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