We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 Reasons Why You Should Buy Papa Murphy's (FRSH) Shares Now
Read MoreHide Full Article
While the restaurant industry struggles through its worst period since the end of the recession, pizza companies seem to remain unperturbed by the plight. Demand for pizza is hardly ever going to go down and pizza giants are riding on this certitude. Papa Murphy’s Holdings, Inc. (FRSH - Free Report) is one such Zacks Rank #1 (Strong Buy) company that has good prospects and should make a value addition to your portfolio. You can see the complete list of today’s Zacks #1 Rank stocks here.
Headquartered in Vancouver, WA, Papa Murphy’s operates as a franchisor and operator of the Take 'N' Bake pizza chain in the U.S. The company operates over 1,575 franchised and corporate-owned fresh pizza stores across 38 U.S. states, Canada and the United Arab Emirates.
Earnings Growth
Arguably, nothing is more important than earnings growth as surging profit levels are often an indication of strong prospects (and stock price gains) for the company in question.
While Papa Murphy’s has put up a historical EPS growth rate of 173.9%, compared with the industry average of 9.2%, investors should really focus on the projected growth. Here, the company is looking to grow at a rate of 31.3%, while the Zacks categorized Retail-Restaurants industry’s average calls for EPS growth of just 7.4% in comparison.
Valuation Looks Reasonable
Papa Murphy’s has a Value Style Score of ‘A’ on our style score system that helps us to identify potential outperformers. The Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount.
Looking at the sales of the company, it is currently trading at a P/S ratio of 0.63, much lower than the industry average which stands at 1.16. Some people like this metric more than other value-focused ones because sales are harder to manipulate with accounting tricks than earnings.
An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This ratio doesn’t take amortization and depreciation into account and therefore can give a more accurate picture of the financial health of a business. Papa Murphy's has a P/CF of 3.82, lower than the industry’s average of 9.30.
Additionally, its P/B ratio (used to compare a stock's market value to its book value) is 0.77, which is considerably lower than the industry average of 3.30.
All these ratios deem the company undervalued in comparison with its industry peers and also indicate a good time to buy.
Stock Price Movement
Papa Murphy’s stock is seeing solid activity on the price front right now, allowing the company to carry a Momentum Style Score of ‘B’. Shares of Papa Murphy’s have rallied 19.4% year to date, widely outpacing the industry’s gain of 1.2% in the same time frame. In fact, we note that Papa Murphy’s has outperformed the industry in each of 1-week, 4-week and 12-week time frames as well.
Notably, the stock is currently trading extremely cheap at around $5 per share. This makes it a lucrative buy as it does not require a high amount of investment.
Estimate Revisions
It should be noted that since its IPO in May 2014, the company has beaten/met earnings estimates in eight of the reported 11 quarters, recording an average beat of 147.69% in the trailing four quarters.
Further, upward estimate revisions reflect optimism in the stock’s prospects. Current quarter estimates have also moved north by 10%, over the last two months, reflecting two upward versus one downward revisions. Current year estimates have jumped up over 100% over the past two months, as a result of three upward revisions against none downward.
Low Beta Stock
A stock with beta less than 1 suggests that the price movement of the stock is not highly correlated with the market. Since they are less volatile than the market, they are safer bets at the moment. Papa Murphy’s has an impressive beta of 0.03, signifying a close to non-existent correlation with the market at large. Therefore, adding this stock to your portfolio should bring down your portfolio’s overall beta considerably, thereby reducing risk.
Bottom Line
Papa Murphy’s is expected to perform well in the quarters ahead based on all these statistics. However, investors should be cautious of higher labor costs and a challenging sales environment that is hurting the industry at large. Further, competition from larger pizza companies like Papa John’s International, Inc. (PZZA - Free Report) , Domino’s Pizza, Inc. (DPZ - Free Report) and YUM! Brands’, Inc.’s (YUM - Free Report) Pizza Hut, remains threat to the company’s top-line growth. Nevertheless, we are hopeful on the stock’s prospects, going ahead, as it continues to reflect strength in several areas.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
5 Reasons Why You Should Buy Papa Murphy's (FRSH) Shares Now
While the restaurant industry struggles through its worst period since the end of the recession, pizza companies seem to remain unperturbed by the plight. Demand for pizza is hardly ever going to go down and pizza giants are riding on this certitude. Papa Murphy’s Holdings, Inc. (FRSH - Free Report) is one such Zacks Rank #1 (Strong Buy) company that has good prospects and should make a value addition to your portfolio. You can see the complete list of today’s Zacks #1 Rank stocks here.
Headquartered in Vancouver, WA, Papa Murphy’s operates as a franchisor and operator of the Take 'N' Bake pizza chain in the U.S. The company operates over 1,575 franchised and corporate-owned fresh pizza stores across 38 U.S. states, Canada and the United Arab Emirates.
Earnings Growth
Arguably, nothing is more important than earnings growth as surging profit levels are often an indication of strong prospects (and stock price gains) for the company in question.
While Papa Murphy’s has put up a historical EPS growth rate of 173.9%, compared with the industry average of 9.2%, investors should really focus on the projected growth. Here, the company is looking to grow at a rate of 31.3%, while the Zacks categorized Retail-Restaurants industry’s average calls for EPS growth of just 7.4% in comparison.
Valuation Looks Reasonable
Papa Murphy’s has a Value Style Score of ‘A’ on our style score system that helps us to identify potential outperformers. The Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount.
Looking at the sales of the company, it is currently trading at a P/S ratio of 0.63, much lower than the industry average which stands at 1.16. Some people like this metric more than other value-focused ones because sales are harder to manipulate with accounting tricks than earnings.
An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This ratio doesn’t take amortization and depreciation into account and therefore can give a more accurate picture of the financial health of a business. Papa Murphy's has a P/CF of 3.82, lower than the industry’s average of 9.30.
Additionally, its P/B ratio (used to compare a stock's market value to its book value) is 0.77, which is considerably lower than the industry average of 3.30.
All these ratios deem the company undervalued in comparison with its industry peers and also indicate a good time to buy.
Stock Price Movement
Papa Murphy’s stock is seeing solid activity on the price front right now, allowing the company to carry a Momentum Style Score of ‘B’. Shares of Papa Murphy’s have rallied 19.4% year to date, widely outpacing the industry’s gain of 1.2% in the same time frame. In fact, we note that Papa Murphy’s has outperformed the industry in each of 1-week, 4-week and 12-week time frames as well.
Notably, the stock is currently trading extremely cheap at around $5 per share. This makes it a lucrative buy as it does not require a high amount of investment.
Estimate Revisions
It should be noted that since its IPO in May 2014, the company has beaten/met earnings estimates in eight of the reported 11 quarters, recording an average beat of 147.69% in the trailing four quarters.
Further, upward estimate revisions reflect optimism in the stock’s prospects. Current quarter estimates have also moved north by 10%, over the last two months, reflecting two upward versus one downward revisions. Current year estimates have jumped up over 100% over the past two months, as a result of three upward revisions against none downward.
Low Beta Stock
A stock with beta less than 1 suggests that the price movement of the stock is not highly correlated with the market. Since they are less volatile than the market, they are safer bets at the moment. Papa Murphy’s has an impressive beta of 0.03, signifying a close to non-existent correlation with the market at large. Therefore, adding this stock to your portfolio should bring down your portfolio’s overall beta considerably, thereby reducing risk.
Bottom Line
Papa Murphy’s is expected to perform well in the quarters ahead based on all these statistics. However, investors should be cautious of higher labor costs and a challenging sales environment that is hurting the industry at large. Further, competition from larger pizza companies like Papa John’s International, Inc. (PZZA - Free Report) , Domino’s Pizza, Inc. (DPZ - Free Report) and YUM! Brands’, Inc.’s (YUM - Free Report) Pizza Hut, remains threat to the company’s top-line growth. Nevertheless, we are hopeful on the stock’s prospects, going ahead, as it continues to reflect strength in several areas.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>