Tuesday August 6, 2019, 00:00:00
By Mark Kalinowski
After today’s (Tuesday’s) market close, Papa John’s (PZZA; Neutral) reported adjusted Q2 EPS of $0.28, below our $0.29 EPS estimate and sell-side consensus (according to Consensus Metrix) of $0.31. A shift in the timing of an operations conference hampered G&A by about $2 million in Q2 from a year-over-year perspective, but should help Q3 year-over-year. We calculate that this is roughly a $0.04-$0.05 amount from an EPS standpoint.
Read more
Monday July 8, 2019, 00:00:00
By Mark Kalinowski
With third-party delivery aggregators continuing to grow, providing additional convenience to the consumer, we decided to look at various quarterly data provided by Grubhub (GRUB; Not Rated), correlating these data sets with various sectors’ same-store sales (for U.S. chain restaurants). To do this, we used six different Kalinowski Restaurant Industry Index sector indices, which are sorted by brand type and based on the weighted-average components from 48 different publiclytraded restaurant concepts. (The weightings are based on each concept’s 2018 U.S. systemwide sales, as measured by Technomic.)
Read more
Wednesday June 26, 2019, 00:00:00
By Mark Kalinowski
Sometimes fighting the trend is futile, and perhaps this is one of those times — we downgrade the shares of Papa John’s (PZZA) today to Neutral (from Buy), cutting our losses. While we still believe that the Papa John’s brand will be turned around in the long run, near-term risks have noticeably increased from where we sit, and the downgrade is warranted based on: (1) the possibility that founder John Schnatter could seek to sell more of his 19% holding in PZZA once his lock-up expires on August 19th, (2) the possibility that Papa John’s may seek to take on additional debt to fund part/all of the $80 million worth of additional investments announced less than a week ago (thus potentially leading to higher interest expenses; we take down our 2020E EPS estimate by $0.10 to $1.60, placing us $0.08 below sell-side consensus according to Consensus Metrix), and (3) the possibility that the recent $80 million investment announcement may hint at greater franchisee financial difficulties than we had previously been presuming. Even taking into account the stock’s decline over the last few business days, with some additional selling pressure possible starting in mid-August should Mr. Schnatter decide to sell more of his what used to be a 31% stake in PZZA, it appears best to be on the sidelines for now. We note the following:
Read more
