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Is a Surprise in Store for Papa John's (PZZA) in Q3 Earnings?
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World’s third-largest pizza delivery company Papa John’s International, Inc. (PZZA - Free Report) is scheduled to report third-quarter 2016 numbers on Nov 1, after the market closes.
Last quarter, Papa John’s posted a positive earnings surprise of 12.96%. In fact, the company’s earnings surpassed/met the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 7.81%.
Let’s see how things are shaping up for this announcement.
Papa John's has been delivering positive comps in both the domestic and international markets since the beginning of 2014 on the back of various sales building initiatives such as menu innovation and provision of value offers. We expect this trend to continue in the to-be-reported quarter as well.
Papa John’s large-scale international expansion endeavors also bode well. Moreover, efforts to remove artificial flavors and synthetic colors from the entire menu are commendable and should appeal to health-conscious customers. Further, the company’s investments in technology-driven initiatives like digital ordering and applications development should continue to boost revenues.
However, a soft consumer spending environment in the U.S. restaurant space might hurt traffic and comps in the third quarter. Negative currency translation could further affect the quarter’s performance given the company’s substantial international exposure. Also, rising labor costs and expenses incurred to execute these initiatives might dent the quarter’s profits.
Earnings Whispers
Our proven model does not conclusively show that Papa John’s is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as elaborated below. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks ESP: Papa John’s has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 50 cents.
Zacks Rank: Papa John’s has a Zacks Rank #2 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some restaurant companies to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Fogo de Chao, Inc. has an Earnings ESP of +13.33% and a Zacks Rank #3.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an Earnings ESP of +7.69% and a Zacks Rank #3.
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Is a Surprise in Store for Papa John's (PZZA) in Q3 Earnings?
World’s third-largest pizza delivery company Papa John’s International, Inc. (PZZA - Free Report) is scheduled to report third-quarter 2016 numbers on Nov 1, after the market closes.
Last quarter, Papa John’s posted a positive earnings surprise of 12.96%. In fact, the company’s earnings surpassed/met the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 7.81%.
Let’s see how things are shaping up for this announcement.
PAPA JOHNS INTL Price and EPS Surprise
PAPA JOHNS INTL Price and EPS Surprise | PAPA JOHNS INTL Quote
Factors Likely to Influence this Quarter
Papa John's has been delivering positive comps in both the domestic and international markets since the beginning of 2014 on the back of various sales building initiatives such as menu innovation and provision of value offers. We expect this trend to continue in the to-be-reported quarter as well.
Papa John’s large-scale international expansion endeavors also bode well. Moreover, efforts to remove artificial flavors and synthetic colors from the entire menu are commendable and should appeal to health-conscious customers. Further, the company’s investments in technology-driven initiatives like digital ordering and applications development should continue to boost revenues.
However, a soft consumer spending environment in the U.S. restaurant space might hurt traffic and comps in the third quarter. Negative currency translation could further affect the quarter’s performance given the company’s substantial international exposure. Also, rising labor costs and expenses incurred to execute these initiatives might dent the quarter’s profits.
Earnings Whispers
Our proven model does not conclusively show that Papa John’s is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as elaborated below. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks ESP: Papa John’s has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 50 cents.
Zacks Rank: Papa John’s has a Zacks Rank #2 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some restaurant companies to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
The Wendy's Company (WEN - Free Report) has an Earnings ESP of +10.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fogo de Chao, Inc. has an Earnings ESP of +13.33% and a Zacks Rank #3.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an Earnings ESP of +7.69% and a Zacks Rank #3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>