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Papa John's Inks Development Deal in Central Asia, Poland

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The world’s third largest pizza delivery company, Papa John’s International, Inc. (PZZA - Free Report) continues with the establishment and expansion of the brand into new countries.

In this regard, the company’s franchisee in Russia and Belarus - PJ Western - has signed development agreements to mark its presence in the Central Asian counties of Kazakhstan and Kyrgyzstan, and Poland.

PJ Western is thus set to open 16 restaurants in Kazakhstan by 2022, with the first store scheduled to open in Almaty in the next few months. In addition, the franchisee intends to open its first restaurant in Kyrgyzstan in the fourth quarter of 2017, with plans in place to open six restaurants in Kyrgyzstan's capital city of Bishkek over the next three years. Also, they are slated to open 23 restaurants in Poland beginning in late 2017.

In fact, given the tremendous success witnessed in Russia and Belarus, the company is excited about its growth prospects in these three new countries.

We note that international expansion has been the backbone of Papa John’s operations for quite some time now. In fact, the second quarter of 2017 marked the 29th consecutive quarter of positive comps in the international segment. Currently, the company has 1660 international restaurants in 44 countries. It is also looking for potential franchisees in Paris, France, Germany, Belgium and Denmark.

Reportedly, Papa John’s has been particularly focusing on aggressively expanding its presence in small Russian towns as it sees room for 60-80 store openings a year in the country over the next five years.

However, owing to its large international presence, Papa John’s is exposed to risks of fluctuations in currency exchange rates, which impacts the company’s top line. Moreover, an increasing wage rate environment and a challenging industry backdrop add to the concerns.

Nevertheless, shares of Papa John’s have gained 4.7% in the last month, outperforming 2% decline of the industry it belongs to.

Meanwhile, Papa John’s commitment to provide quality food is commendable and should continue appealing health conscious customers. In addition to product innovation, the company is focusing on digital innovation to attract new customers and drive efficiency, which is impressive.

Going forward, this Zacks Rank #2 (Buy) company’s strategic partnerships, increased focus on franchising and particularly, large scale expansion plans should act as growth drivers.

Key Picks

Some other top-ranked stocks in this sector include and Dave & Buster's Entertainment, Inc. (PLAY - Free Report) , Del Taco Restaurants, Inc. (TACO - Free Report) and Bravo Brio Restaurant Group, Inc. . All the three stocks carry the same bullish rank as Papa John’s. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dave & Buster's earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average beat of 30.50%. Meanwhile, for fiscal 2017, earnings per share (EPS) is projected to witness a rise of 23.5%.

Del Taco’s trailing four-quarter average earnings surprise is a positive 3.61%. For 2017, EPS is expected to improve 6.3%.

The Zacks Consensus Estimate for Bravo Brio’s 2017 earnings climbed 4.3%, over the past 30 days. Moreover, the company’s trailing four-quarter average earnings surprise is a positive 28.27%.

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