PZZA Our Meeting with Management in Louisville

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

We recently met with Papa John’s (PZZA; Buy) — including President & CEO Steve Ritchie, Executive Vice President & Chief Operating and Growth Officer Michael R. Nettles, Senior Vice President & CFO Joseph H. Smith, and Vice President of Investor Relations & Strategy Steve Coke — in Louisville, Kentucky. We thank them for their time! Topics of interest that we asked about include new brand ambassador (as well as board member and franchisee) Shaquille O’Neal (a.k.a. Shaq), franchisee financial health, and delivery aggregators. We maintain our Buy rating on PZZA, and note the following:

MCD (Post-Call) Weak Same-Store Sales Trends Not Today

By Mark Kalinowski Published on April 30, 2019 at 12:00 AM

Earlier today, McDonald’s (MCD; Buy) reported its Q1 EPS of $1.72, above our $1.71 forecast, but below the sell-side consensus of $1.75. But the real story is that U.S. same-store sales rose by an unexpectedly robust +4.5%, easily surpassing our above-consensus +3.2% projection. McDonald’s attributes the strong showing to “successful promotions, including the Bacon Event, the 2 for $5 Mix and Match deal, and Donut Sticks, as well as a net positive impact from our Experience of the Future deployment.” On this latter front, management noted on today’s conference call that this is the first time ever that it can make this statement. We look for this effect to continue in coming quarters.

SBUX We’ll Hoist a Venti S’mores Frappuccino to This Improved Outlook

By Mark Kalinowski Published on April 25, 2019 at 12:00 AM

After Thursday’s market close, Starbucks (SBUX; Neutral) reported adjusted fiscal Q2 EPS of $0.60, surpassing our $0.57 forecast and the sell-side consensus (according to Consensus Metrix) of $0.56. The company also raises its target range for full-fiscal 2019 EPS to $2.75-$2.79 (from $2.68-$2.73 previously, an increase of $0.07 at the low end of the range and an increase of $0.06 at the high end of the range). Management attributes the improved outlook as follows: (1) two-thirds to an improved tax-rate outlook, and (2) one-third to a better outlook for Americas’ operating margins.