Back to top

Papa John's (PZZA) Founder to Step Down From Board, Stock Up

Read MoreHide Full Article

Papa John's International, Inc.’s (PZZA - Free Report) founder John Schnatter has agreed to step down from the board. Per the agreement, Schnatter, owner of 31% of Papa John's shares, will cooperate with the company to find an independent director who will take over the reins.

Following the news, shares of the company gained 5% on Mar 5. However, in a year’s time, the stock has lost 22.6% against the industry’s 19.3% rally.

Papa John's will also eliminate a provision of the company’s 'poison pill' plan, which was implemented in July 2018. The provision restricted its shareholders to communicate with each other. Schnatter said that “I founded Papa John’s, built it from the ground up and remain its largest shareholder. I care deeply about its employees, franchisees, and investors and am thankful that I’ve been able to resolve these important issues, and that we can all focus on the Company’s business without the need for additional litigation.”

Apart from witnessing persistent decline in revenues, Papa John’s has been under the spotlight of negative publicity after Schnatter has been publicly denounced for making a racist comment. Ever since, Papa John’s has been relentlessly trying to distance itself from Schnatter, and craft various ways to regain its brand image and sales trend.

To this end, the company was exploring various opportunities to sell out completely. Last year, Papa John’s said to have sought assistance from Bank of America Corporation (BAC) on potential buyout interests.

Papa John’s also undertook an assistance program for its U.S. and Canada franchisees. Under the program, it planned on reducing royalties, food-service pricing and online fees. Further, the company has been arranging funds for its franchises to implement marketing and reimaging initiatives.

Zacks Rank & Stocks to Consider

Papa John’s has a Zacks Rank #5 (Strong Sell).

Better-ranked stocks in the same space include Brinker International, Inc. (EAT - Free Report) , El Pollo Loco Holdings, Inc. (LOCO - Free Report) and Darden Restaurants, Inc. (DRI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Brinker International’s current-year earnings are likely to grow by 10%.

El Pollo Loco Holdings delivered positive earnings surprise in three of the trailing four quarters, the average beat being of 5.5%.

Darden Restaurants reported better-than-expected earnings in three of the trailing four quarters, the average beat being 4%.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>



Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »

More from Zacks Analyst Blog

You May Like

Published in