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Here's Why You Should Retain Papa John's (PZZA) Stock Now
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Papa John’s International, Inc. (PZZA - Free Report) is likely to benefit from menu innovation, loyalty program and unit-expansion efforts. Also, the emphasis on digital enhancements bodes well. However, the challenging macro environment is a concern.
Let’s discuss why investors should retain the stock for the time being.
Factors Driving Growth
Papa John’s continues to focus on product introduction to drive growth. During the fiscal third quarter, the company expanded its Epic Stuffed Crust Pizza platform with new Garlic Epic Stuffed Crust Pizza. It also launched new all-white meat Boneless Wings. The items supported the company’s barbell strategy in lieu of providing value across a broad range of price points and product offerings. Apart from this, the company expanded its Papa Bites platform with a limited-time new dessert, Twix Papa Bites. The company stated that it has significant LTO and long-term platform launches in the pipeline. We believe that menu innovation efforts will likely drive long-term ticket and transaction growth in the upcoming periods.
The company’s loyalty program witnessed a rise in digital transactions during third-quarter 2023. Features like early access to new products, better targeting of offers and promotions and higher frequency and tickets have benefited the company.
During the quarter, digital channels contributed more than 85% to the company’s sales. The company emphasized simplifying its digital ordering journey by offering clear, fast and easy-to-understand navigation paths into the menu, paving a path for an increase in attachment rates.
Papa John’s is committed to developing and maintaining a solid franchise system. The company strives to eliminate barriers to expanding in existing international markets and identify new market opportunities. In third-quarter fiscal 2023, the company announced the opening of eight net new units in North America and 37 net new units internationally. The company reported solid performances with respect to the openings in North America.
During the fiscal third quarter, the company acquired 27 Papa John’s restaurants in the U.K. As of Sep 24, the company had a global restaurant count of 5,825, with operations in 48 countries and territories worldwide. It anticipates its global development to be between 245 and 260 net new units in fiscal 2023.
Concerns
Image Source: Zacks Investment Research
Shares of Papa John's have declined 18.1% in the past year against the industry’s growth of 3.7%. The downside was mainly due to the challenging macro environment.
During the fiscal third quarter, the company’s international comps were affected by challenges in the U.K. market. Adverse macroeconomic conditions resulted in negative comparable sales and a challenging operating environment for its franchisees. During the quarter, comps at international restaurants were down 0.3% year over year compared with 10.1% in the prior-year quarter. For the fiscal fourth quarter, the company anticipates comps to remain under pressure owing to geopolitical uncertainty in the Middle East. It also expects headwinds within Asia markets.
Zacks Rank & Key Picks
Papa John's currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail-Wholesale sector include:
The Zacks Consensus Estimate for Wingstop’s 2024 sales and earnings per share (EPS) suggests rises of 15.6% and 17.2%, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) sports a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 223.6%, on average. Shares of EAT have increased 7% in the past year.
The Zacks Consensus Estimate for EAT’s fiscal 2024 sales and EPS indicates a 5.1% and a 26.2% rise, respectively, from the year-ago period’s levels.
FAT Brands Inc. (FAT - Free Report) currently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 36.6%, on average. The stock has declined 13.2% in the past year.
The Zacks Consensus Estimate for FAT Brands’ 2024 sales and EPS suggests an increase of 35.6% and 27.4%, respectively, from the year-ago period’s levels.
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Here's Why You Should Retain Papa John's (PZZA) Stock Now
Papa John’s International, Inc. (PZZA - Free Report) is likely to benefit from menu innovation, loyalty program and unit-expansion efforts. Also, the emphasis on digital enhancements bodes well. However, the challenging macro environment is a concern.
Let’s discuss why investors should retain the stock for the time being.
Factors Driving Growth
Papa John’s continues to focus on product introduction to drive growth. During the fiscal third quarter, the company expanded its Epic Stuffed Crust Pizza platform with new Garlic Epic Stuffed Crust Pizza. It also launched new all-white meat Boneless Wings. The items supported the company’s barbell strategy in lieu of providing value across a broad range of price points and product offerings. Apart from this, the company expanded its Papa Bites platform with a limited-time new dessert, Twix Papa Bites. The company stated that it has significant LTO and long-term platform launches in the pipeline. We believe that menu innovation efforts will likely drive long-term ticket and transaction growth in the upcoming periods.
The company’s loyalty program witnessed a rise in digital transactions during third-quarter 2023. Features like early access to new products, better targeting of offers and promotions and higher frequency and tickets have benefited the company.
During the quarter, digital channels contributed more than 85% to the company’s sales. The company emphasized simplifying its digital ordering journey by offering clear, fast and easy-to-understand navigation paths into the menu, paving a path for an increase in attachment rates.
Papa John’s is committed to developing and maintaining a solid franchise system. The company strives to eliminate barriers to expanding in existing international markets and identify new market opportunities. In third-quarter fiscal 2023, the company announced the opening of eight net new units in North America and 37 net new units internationally. The company reported solid performances with respect to the openings in North America.
During the fiscal third quarter, the company acquired 27 Papa John’s restaurants in the U.K. As of Sep 24, the company had a global restaurant count of 5,825, with operations in 48 countries and territories worldwide. It anticipates its global development to be between 245 and 260 net new units in fiscal 2023.
Concerns
Image Source: Zacks Investment Research
Shares of Papa John's have declined 18.1% in the past year against the industry’s growth of 3.7%. The downside was mainly due to the challenging macro environment.
During the fiscal third quarter, the company’s international comps were affected by challenges in the U.K. market. Adverse macroeconomic conditions resulted in negative comparable sales and a challenging operating environment for its franchisees. During the quarter, comps at international restaurants were down 0.3% year over year compared with 10.1% in the prior-year quarter. For the fiscal fourth quarter, the company anticipates comps to remain under pressure owing to geopolitical uncertainty in the Middle East. It also expects headwinds within Asia markets.
Zacks Rank & Key Picks
Papa John's currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail-Wholesale sector include:
Wingstop Inc. (WING - Free Report) sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 28.9%, on average. The stock has surged 55.2% in the past year. You can see the complete list of today’s Zacks Rank #1 stocks here.
The Zacks Consensus Estimate for Wingstop’s 2024 sales and earnings per share (EPS) suggests rises of 15.6% and 17.2%, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) sports a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 223.6%, on average. Shares of EAT have increased 7% in the past year.
The Zacks Consensus Estimate for EAT’s fiscal 2024 sales and EPS indicates a 5.1% and a 26.2% rise, respectively, from the year-ago period’s levels.
FAT Brands Inc. (FAT - Free Report) currently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 36.6%, on average. The stock has declined 13.2% in the past year.
The Zacks Consensus Estimate for FAT Brands’ 2024 sales and EPS suggests an increase of 35.6% and 27.4%, respectively, from the year-ago period’s levels.