Pizza Pizza Royalty (PZA) AI Stock Analysis

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Pizza Pizza Royalty

(OTC:PZA)

77Outperform

Pizza Pizza Royalty exhibits overall strong financial health and stability, supported by effective cost management and a robust equity position. The stock's moderate valuation with a high dividend yield is appealing, yet caution is advised due to the high payout ratio and recent sales challenges. Expansion efforts and marketing innovations provide long-term growth potential, but short-term outlook is affected by external economic pressures and declining sales.

Pizza Pizza Royalty (PZA) vs. S&P 500 (SPY)

Market Cap

C$494.97M

Dividend Yield6.28%

Average Volume (3M)59.27K

Price to Earnings (P/E)15.8

Beta (1Y)0.50

Revenue Growth-1.02%

EPS Growth-1.76%

CountryCA

Employees1,325

SectorConsumer Cyclical

Sector Strength73

IndustryRestaurants

Share Statistics

EPS (TTM)0.23

Shares Outstanding24,618,393

10 Day Avg. Volume55,421

30 Day Avg. Volume59,265

Financial Highlights & Ratios

PEG Ratio-7.04

Price to Book (P/B)1.51

Price to Sales (P/S)0.00

P/FCF Ratio10.76

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$14.00

Price Target Upside-5.54% Downside

Rating ConsensusHold

Number of Analyst Covering1

Pizza Pizza Royalty Business Overview & Revenue Model

Company DescriptionPizza Pizza Royalty Corp., through its subsidiary, Pizza Pizza Royalty Limited Partnership, owns and franchises quick service restaurants under the Pizza Pizza and Pizza 73 brands in Canada. It also distributes food. As of December 31, 2021, the company had 727 restaurants in the royalty pool. Pizza Pizza Royalty Corp. was founded in 1967 and is headquartered in Toronto, Canada.

How the Company Makes MoneyPizza Pizza Royalty Corp makes money primarily through the collection of royalty fees from its franchisees. The company has established a structure where franchisees pay a percentage of their sales to PZA in exchange for the use of the Pizza Pizza and Pizza 73 brand names, trademarks, and operational systems. This model ensures a steady income stream that is tied to the overall performance of the franchised locations. The company’s revenue is thus directly linked to the sales generated by the restaurants under its brands. Key factors contributing to its earnings include the growth and success of its franchise network, effective brand management, and the continued popularity of its food offerings among consumers.

Pizza Pizza Royalty Financial Statement Overview

Summary

Pizza Pizza Royalty Corp demonstrates robust financial health with strong profitability and cash flow metrics, highlighted by excellent cash flow management and high operating margins. However, the slight decline in revenue growth indicates a need for strategic enhancement to sustain long-term performance.

Income Statement

Very Positive

The company exhibits strong profitability with a consistent gross profit margin of 100% and a robust net profit margin of 77.8% for TTM. EBIT and EBITDA margins remain high at 98.2% and 47.3%, respectively, indicating effective cost management and operational efficiency. However, revenue growth is slightly negative at -0.52% TTM, suggesting a need for revenue enhancement strategies.

Balance Sheet

Positive

The balance sheet is stable with a low debt-to-equity ratio of 0.16, indicating prudent financial leverage. The return on equity (ROE) is strong at 10.41% TTM, demonstrating effective use of equity. The equity ratio stands at a healthy 79.9%, reflecting a solid capital structure. However, the low revenue growth could pose future challenges.

Cash Flow

Very Positive

Cash flow management is excellent with a positive free cash flow growth of 0.24% TTM. The operating cash flow to net income ratio is strong at 1.01, indicating high-quality earnings. Free cash flow to net income ratio is also at 1.01, showcasing efficient cash generation capabilities. This robust cash flow profile supports financial flexibility.

TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
40.01M	40.22M	36.43M	31.92M	31.79M	35.95M
	Gross Profit
40.01M	40.22M	36.43M	31.92M	31.79M	35.95M
	EBIT
39.29M	39.58M	35.80M	31.36M	31.15M	35.45M
	EBITDA
18.94M	36.23M	35.88M	31.36M	31.66M	33.89M
	Net Income Common Stockholders
31.13M	30.98M	27.55M	23.92M	24.47M	27.30M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.91M	8.51M	7.94M	6.16M	5.00M	3.29M
	Total Assets
355.76M	370.09M	367.83M	363.06M	361.55M	359.01M
	Total Debt
46.99M	46.98M	46.96M	46.94M	46.92M	46.91M
	Net Debt
45.83M	44.47M	45.02M	44.28M	44.67M	46.37M
	Total Liabilities
70.47M	76.18M	75.41M	72.83M	73.14M	71.55M
	Stockholders Equity
285.29M	293.91M	292.42M	290.23M	288.40M	287.46M
Cash Flow		Free Cash Flow
31.42M	31.35M	28.99M	24.75M	25.19M	28.30M
	Operating Cash Flow
31.42M	31.35M	28.99M	24.75M	25.19M	28.30M
	Investing Cash Flow
0.00	0.00	-2.50M	-750.00K	0.00	0.00
	Financing Cash Flow
-33.18M	-30.78M	-27.21M	-23.60M	-23.47M	-28.92M

Pizza Pizza Royalty Technical Analysis

Technical Analysis Sentiment

Positive

Last Price14.82

Price Trends

50DMA

13.77

Positive

100DMA

13.30

Positive

200DMA

12.95

Positive

Market Momentum

MACD

0.32

Negative

RSI

69.23

Neutral

STOCH

94.75

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:PZA, the sentiment is Positive. The current price of 14.82 is above the 20-day moving average (MA) of 14.36, above the 50-day MA of 13.77, and above the 200-day MA of 12.95, indicating a bullish trend. The MACD of 0.32 indicates Negative momentum. The RSI at 69.23 is Neutral, neither overbought nor oversold. The STOCH value of 94.75 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:PZA.

Pizza Pizza Royalty Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PZA	77 Outperform	C$494.97M	15.79	10.29%	6.28%	-1.02%	-1.76%
QSR	77 Outperform	$43.19B	23.30	31.29%	3.41%	26.22%	-22.75%
QSP.UN	73 Outperform	C$43.12B	23.16	27.52%	3.48%	21.63%	-9.39%
MTY	68 Neutral	C$1.03B	151.65	1.11%	2.55%	0.33%	-92.77%
Sector *	61 Neutral	$6.99B	11.27	2.81%	3.90%	2.61%	-21.77%
ODD	41 Neutral	C$21.16M	―		―	-3.24%	42.46%

* Consumer Cyclical Sector Average

Performance Comparison

TSE:PZA

Pizza Pizza Royalty

14.84

2.33

18.66%

TSE:QSR

Restaurant Brands International

98.68

7.69

8.45%

TSE:MTY

MTY Food Group

44.66

0.24

0.54%

TSE:ODD

Odd Burger Corporation

0.20

0.04

25.00%

TSE:QSP.UN

Restaurant BrndLP

100.02

8.86

9.72%

Pizza Pizza Royalty Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q1-2025)

% Change Since: 0.68%|

Next Earnings Date:Aug 06, 2025

Earnings Call Sentiment Positive

The earnings call reflects a positive start to 2025 with solid sales growth, successful product innovations, and effective marketing strategies. Despite economic challenges and a high payout ratio, the company is maintaining a strong franchise network and is optimistic about future growth and expansion.

Q1-2025 Updates

Positive Updates

Positive Same-Store Sales Growth

Pizza Pizza and Pizza 73 reported a combined same-store sales growth of 1.2% in Q1 2025, with Pizza Pizza at 0.6% and Pizza 73 at 4.3%.

Innovation and New Product Success

Introduction of the massive 18-inch pizza and Loaded Tater Tots led to increased sales. The new stuffed crust option at Pizza 73 doubled sales expectations.

Effective Marketing Strategies

The reverse tariff promotion with a 25% discount was successful, particularly around the Four Nations Hockey final, driving visibility and incremental sales.

Expansion and Franchise Growth

Opened two traditional and two nontraditional Pizza Pizza locations, and one traditional Pizza 73 location, with a planned 2% to 3% network expansion in 2025.

Increased Royalty Income

Royalty income increased 1.9% to $9.7 million in the quarter due to same-store sales growth and additional restaurants in the Royalty Pool.

Strong Franchisee Network

Positive franchisee sentiment and recognition as the number one franchise from the Elite franchise award.

Negative Updates

Economic Challenges and Competitive Environment

The economic landscape is challenging with heightened competition and customers being more deliberate in managing their spend.

High Payout Ratio

The payout ratio for Q1 2025 was 117%, resulting in a decrease in the company's working capital reserve by $900,000.

Delayed Expansion in Mexico

Expansion efforts in Mexico have been slower than expected, with difficulties in lease agreements and construction timelines.

Company Guidance

In the Pizza Pizza Royalty Corp.'s earnings call for the first quarter of 2025, the company reported a positive start to the year with a combined same-store sales growth of 1.2%. Pizza Pizza restaurants experienced a 0.6% growth, while Pizza 73 saw a 4.3% increase, despite lapping a positive Q1 growth of 1.7% in 2024. The quarter's success was attributed to increased guest traffic and average customer checks, driven by new product launches and marketing initiatives like the XXL pizza at $20 and the 25% reverse tariff promotion. Additionally, Pizza 73 introduced the Skinner Dinner and signature wraps, contributing to its performance. The company also expanded its restaurant network, adding four new Pizza Pizza and one Pizza 73 locations, while closing five others. Looking ahead, the company expects a 2% to 3% growth in traditional restaurant expansion and continues to invest in technology to enhance customer engagement. Financially, Royalty Pool System Sales increased by 1.6% to $151.3 million, with royalty income rising by 1.9% to $9.7 million. The quarter's payout ratio was 117%, leading to a decrease in the working capital reserve to $5.2 million.

Pizza Pizza Royalty Corporate Events

DividendsBusiness Operations and StrategyFinancial Disclosures

Pizza Pizza Royalty Corp. Reports 2024 Financial Results Amid Expansion

Neutral

Mar 31, 2025

Pizza Pizza Royalty Corp. reported a decrease in same-store sales and royalty pool sales for both the fourth quarter and the full year of 2024, attributed to challenging economic conditions and increased competition. Despite these declines, the company expanded its restaurant network by 23 net locations in 2024, with 48 new restaurants opened, and continued to leverage its value-oriented offerings to attract customers. The company declared increased dividends for the year, reflecting its commitment to maximizing shareholder returns, despite a higher payout ratio compared to the previous year.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.