Pizza Pizza Royalty (PZA) AI Stock Analysis

• Market Cap: C$488.30M
• Dividend Yield: 6.55%
• Average Volume (3M): 30.96K
• Price to Earnings (P/E): 15.6
• Beta (1Y): 0.61
• Revenue Growth: 1.35%
• EPS Growth: -1.11%
• Country: CA
• Employees: 1,325
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Restaurants
• EPS (TTM): 0.24
• Shares Outstanding: 24,618,393
• 10 Day Avg. Volume: 38,173
• 30 Day Avg. Volume: 30,963
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$17.01
• Price Target Upside: 7.63% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 77 Outperform
• Price Target: ―

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 Business Overview & Revenue Model

Company Description

Pizza Pizza Royalty Corp (PZA) is a Canadian company focused on the acquisition and management of royalty income from the Pizza Pizza and Pizza 73 restaurant brands. The company operates within the quick-service restaurant sector, providing a wide range of pizza and related food products through its franchised locations across Canada. PZA does not directly operate the restaurants but instead earns income through royalty agreements with its franchisees.

How the Company Makes Money

Pizza 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 showcases strong financial health with robust profitability and efficient cash flow management. Despite minor revenue fluctuations, the company maintains low leverage and a high equity position, reflecting financial stability and operational efficiency.

Income Statement

Pizza Pizza Royalty demonstrates strong profitability with consistent gross profit margins at 100% due to its royalty business model. The net profit margin has remained robust at approximately 78% in 2024. Revenue has shown resilience with a slight decrease of 1.02% in 2024 compared to 2023, following a notable growth from 2021 to 2023. EBIT and EBITDA margins are exceptionally high, indicating effective cost management. Overall, the company showcases stable profitability despite minor revenue fluctuations.

Balance Sheet

The company exhibits a strong equity position with an equity ratio of 79.8% in 2024, reflecting financial stability. The debt-to-equity ratio remains low at 0.16, indicating a conservative approach to leverage. Return on equity is impressive at 10.38%, showcasing efficient use of shareholder capital. Overall, Pizza Pizza Royalty maintains a healthy balance sheet with low leverage risk and strong equity support.

Cash Flow

Cash flow from operations remains healthy, closely matching net income, which reflects strong cash generation capability. Free cash flow remains stable, with a slight decline in growth due to reduced revenue. The operating cash flow to net income ratio is above 1, indicating efficient cash conversion. While free cash flow aligns well with net income, the absence of capex suggests a focus on maintaining existing operations. Overall, cash flow stability supports operational needs and shareholder returns.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	40.37M	39.81M	40.22M	36.43M	31.92M	31.79M
Gross Profit	40.37M	39.81M	40.22M	36.43M	31.92M	31.79M
EBITDA	39.82M	39.48M	36.23M	35.88M	31.36M	31.66M
Net Income	31.21M	30.97M	30.98M	27.55M	23.92M	24.47M
Balance Sheet
Total Assets	379.12M	373.75M	370.09M	367.83M	363.06M	361.55M
Cash, Cash Equivalents and Short-Term Investments	5.13M	5.78M	8.51M	7.94M	6.16M	5.00M
Total Debt	46.92M	46.99M	46.98M	46.96M	46.94M	46.92M
Total Liabilities	76.09M	75.53M	76.18M	75.41M	72.83M	73.14M
Stockholders Equity	303.03M	298.22M	293.91M	292.42M	290.23M	288.40M
Cash Flow
Free Cash Flow	32.29M	30.80M	31.35M	28.99M	24.75M	25.19M
Operating Cash Flow	32.29M	30.80M	31.35M	28.99M	24.75M	25.19M
Investing Cash Flow	-500.00K	1.00M	0.00	-2.50M	-750.00K	0.00
Financing Cash Flow	-33.63M	-33.52M	-30.78M	-27.21M	-23.60M	-23.47M

Pizza Pizza Royalty Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 15.80
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:PZA, the sentiment is Negative. The current price of 15.8 is above the 20-day moving average (MA) of 15.49, above the 50-day MA of 15.53, and above the 200-day MA of 14.36, indicating a bearish trend. The MACD of -0.19 indicates Positive momentum. The RSI at 18.36 is Positive, neither overbought nor oversold. The STOCH value of 1.64 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:PZA.

Pizza Pizza Royalty Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PZA	77 Outperform	C$488.30M	15.58	10.19%	6.55%	1.35%	-1.11%
QSP.UN	73 Outperform	C$42.43B	23.78	25.66%	3.60%	19.92%	-18.34%
QSR	68 Neutral	$30.48B	23.89	28.08%	3.64%	16.82%	-29.91%
QSR	67 Neutral	$43.06B	24.19	28.08%	3.74%	25.29%	-32.66%
MTY	63 Neutral	C$774.09M	23.73	3.64%	3.96%	1.38%	-64.10%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
ODD	41 Neutral	C$8.86M	-3.93	―	―	-2.40%	9.13%

Pizza Pizza Royalty Corporate Events

Pizza Pizza Royalty Corp. Reports 2024 Financial Results Amid Expansion

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.