Papa John’s International, Inc. (PZZA - Free Report) is scheduled to report third-quarter 2018 financial numbers on Nov 6. Notably, the company’s earnings have missed the Zacks Consensus Estimate in two out of the trailing four quarters, the average miss being 5.5%.
What to Expect?
The Zacks Consensus Estimate for third-quarter earnings is pegged at 23 cents, which marks a decline of 61.7% from the year-ago quarter. Meanwhile, the Zacks Consensus Estimate for revenues stands at $384.4 million, reflecting a drop of nearly 11% from the prior-year quarter.
Let’s delve deeper to find out how the company’s top and bottom line will shape up this earnings season.
Factors at Play
Soft comps performance, higher costs and a challenging sales environment in the industry are likely to affect Papa John’s earnings in the soon-to-be reported quarter. The company has reported disappointing results over the past couple of quarters and we expect the downtrend to persist. In the last reported quarter, domestic company-owned restaurant comps fell 6.1% and comps at North America franchised restaurants dropped 7.2%. Hence, declining comps remain a major concern for investors.
Moreover, weak North America commissary sales have been weighing on the company’s performance for quite some time. Also, higher labor costs due to the implementation of The Affordable Care Act, commonly known as Obamacare, are likely to hurt profits. Adjusted earnings are expected to be impacted by lower operating results, primarily from expected pressure on Domestic restaurants’ sales, increased delivery and insurance costs for the company-owned restaurants, and higher costs for technology and marketing investments.
Meanwhile, total operating margin was 6.2% in the second quarter marking a decrease of 240 basis points (bps) from the year-ago quarter. Thus, Papa John’s operating margin is likely to get affected like in the prior quarters.
Papa John's International, Inc. Price and Consensus