PZZA Updating Our Rating on Papa John’s to…

By Mark Kalinowski Published on June 26, 2019 at 12:00 AM

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


By Mark Kalinowski Published on March 29, 2019 at 12:00 AM

We upgrade the shares of Papa John’s (PZZA) to Buy (from Neutral). We have been impressed with the strides Papa John’s has made with (and following) the recent strategic investment of Starboard Value, including the recent naming of basketball legend and businessman Shaquille O’Neal to Papa John’s board of directors and as a brand ambassador (and franchisee), and the appointment of former Subway SVP of Marketing for North America Karlin Linhardt as Papa John’s Global Chief Marketing Officer.

Read More

Tidbits re MCD, PZZA, and the Top 25 Largest International Foodservice Chains

By Mark Kalinowski Published on December 9, 2018 at 12:00 AM

We briefly note the following tidbits regarding McDonald’s (MCD; Buy), Papa John’s International (PZZA; Buy), and the Top 25 Largest International Foodservice Chains:

Read More