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Papa John's International Inc PZZA

Morningstar Rating
$44.29 −0.23 (0.52%)
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Company Report

Papa John's North American Emphasis Intact, but Premium Position Makes for Tough Near-Term Prospects

Papa John's International sits in an interesting niche in the $93 billion global pizza quick-service restaurant market (Euromonitor), with its "better ingredients, better pizza" mantra reflecting a commitment to simpler products that are purportedly higher quality than those of its largest category peers, Domino's and Pizza Hut. The firm's premium positioning limits its ability to lean on discounting during periods of intense competitive pressure but also permits it to compete for more affluent clientele, somewhat blunting its cyclicality. Pizza's categorical position as the cheapest option to feed a family also benefits the subindustry during periods of pressure.

Price vs Fair Value

PZZA is trading at a 35% premium.
Price
$44.29
Fair Value
$79.00
Uncertainty
High
1-Star Price
$238.24
5-Star Price
$69.60
Economic Moat
Pcwmh
Capital Allocation
Nrcfhzz

Bulls Say, Bears Say

Bulls

Papa John's stronger cash-on-cash returns underpin a durable international growth narrative and could see the firm better compete in important pizza markets in continental Europe, Brazil, and Australia.

Bears

Rampant inflation in food costs and hourly labor could lead to structurally lower margins across the restaurant industry.

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News

Trading Information

Previous Close Price
$44.52
Day Range
$43.6045.54
52-Week Range
$41.4786.38
Bid/Ask
$44.20 / $44.32
Market Cap
$1.46 Bil
Volume/Avg
1.5 Mil / 1.1 Mil

Key Statistics

Price/Earnings (Normalized)
16.40
Price/Sales
0.68
Dividend Yield (Trailing)
4.15%
Dividend Yield (Forward)
4.15%
Total Yield
4.20%

Company Profile

Papa John's is one of the largest players in the global QSR, or quick-service restaurant, pizza market, boasting more than 5,900 restaurants across nearly 50 countries at the end of 2023. The firm operates a predominantly franchised system, owning 11% of its restaurants and generating revenue from franchise royalties, sales of pizza and related products at its company-owned stores, and sales from its commissary supply chain. The firm is the fourth-largest limited-service pizza chain both in the US and globally, with a sizable presence in the UK, China, South Korea, and Chile.
Sector
Consumer Cyclical
Industry
Restaurants
Stock Style Box
Small Core
Total Number of Employees
13,200

Competitors

Valuation

Metric
PZZA
YUM
MCD
Price/Earnings (Normalized)
16.4024.6021.73
Price/Book Value
Price/Sales
0.685.257.39
Price/Cash Flow
8.9721.3119.41
Price/Earnings
PZZA
YUM
MCD

Financial Strength

Metric
PZZA
YUM
MCD
Quick Ratio
0.461.130.63
Current Ratio
0.801.490.83
Interest Coverage
3.144.668.46
Quick Ratio
PZZA
YUM
MCD

Profitability

Metric
PZZA
YUM
MCD
Return on Assets (Normalized)
10.18%24.93%16.58%
Return on Equity (Normalized)
Return on Invested Capital (Normalized)
23.15%56.97%21.45%
Return on Assets
PZZA
YUM
MCD
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