Papa John’s: Comparable Sales Growth Holds Steady Despite Tough Industry Backdrop

Narrow-moat Papa John’s fiscal 2024 fourth-quarter preliminary results largely corroborate our comparable-store growth expectations before the earnings call, complemented with robust net new restaurant openings that exceeded our existing projections. For now, we don't anticipate a material impact on our $67 per share fair value estimate, and will glean additional details when the firm reports its full results on Feb. 27. We view the name as meaningfully undervalued and believe investors are overlooking Papa John’s potential for improving store growth prospects, driven by above-average cash-on-cash returns, and commissary segment margin expansion.