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Papa John's (PZZA) Q3 Earnings & Revenues Top, Stock Up

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Shares of Papa John’s International, Inc. (PZZA - Free Report) rose over 4% in after-hour trading on Nov 1, after the company reported better-than-expected third-quarter 2016 results.

Notably, the pizza delivery chain also raised its earnings guidance for full-year 2016.

Earnings and Revenue Discussion

Adjusted earnings of 57 cents per share beat the Zacks Consensus Estimate of 50 cents by 14%. Moreover, earnings increased 26.7% year over year owing to higher revenues.
 

Revenues of $422.4 million exceeded the consensus mark of $420 million by 0.6%. Also, revenues increased 8.5% year over year. The upside reflects higher domestic company-owned restaurants, domestic franchise royalties and fees, domestic commissary and other sales as well as higher international revenues.

Behind the Headline Numbers

Global restaurant sales growth of 7.6% in the third quarter was better than the year-ago growth of 3.9% and 5.9% in the prior quarter.

Excluding foreign currency impact, global restaurant sales growth was 8.9%, which was also better than the year-ago comps growth of 7% and the prior-quarter growth of 7.7%.

Domestic company-owned restaurant sales were up 10.5%, primarily due to a 5.1% increase in equivalent units and a 6.3% rise in comparable sales. Domestic franchise royalties and fees were up 11.2% driven by a 5.1% rise in comparable sales and reduced levels of royalty incentives in 2016. Domestic commissary and other sales were up 6.1% on the back of higher commissary sales.

Comps at system-wide North American restaurants were up 5.5%, higher than 3% comps growth in the year-ago quarter and 4.8% growth last quarter.

International revenues were up 7.2% year over year, as higher royalties and commissary sales were offset by lower company-owned restaurant sales in China. Currency affected international revenues by $3.7 million. Comps at system-wide international restaurants increased 7.6%, weaker than comps growth of 8% a year ago but better than 5.3% growth in the preceding quarter.

Guidance for 2016

Papa John’s has raised its earnings guidance for 2016 to the range of $2.46 to $2.52 per share, up from $2.35 to $2.45 expected previously.

Meanwhile, North America system-wide comps are still projected to rise 3% to 5% and capital expenditures are anticipated between $55 million and $65 million.

PAPA JOHNS INTL Price, Consensus and EPS Surprise

 

PAPA JOHNS INTL Price, Consensus and EPS Surprise | PAPA JOHNS INTL Quote

Zacks Rank & Stocks to Consider

Papa John’s has a Zacks Rank #2 (Buy). Other favourably placed stocks in this sector include Domino's Pizza, Inc. (DPZ - Free Report) , Darden Restaurants, Inc. (DRI - Free Report) and The Wendy's Company (WEN - Free Report) . While Domino’s sports a Zacks Rank #1 (Strong Buy), Darden and Wendy's carry the same Zacks Rank as Papa John’s. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Domino’s 2016 earnings moved up 2.4% over the last 60 days. Meanwhile, for full-year 2016, EPS is expected to improve 22.8%.

The Zacks Consensus Estimate for Darden’s fiscal 2017 earnings climbed 1.3% over the last 60 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 9.32%.

Wendy’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 29.01%. Further, for 2016, EPS is expected to grow 21.2%.

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