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Papa John's (PZZA) Q2 Earnings & Revenues Surpass Estimates

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Papa John’s International, Inc. (PZZA - Free Report) reported better-than-expected second-quarter 2019 results. Its adjusted earnings of 28 cents per share surpassed the Zacks Consensus Estimate of 22 cents by 27.3%. However, the bottom line fell 41.7% from the year-ago quarter figure due to weak operating results.

Revenues totaled $399.6 million, which outpaced the Zacks Consensus Estimate of $398 million. However, the top line declined 7.1% on a year-over-year basis. This downside can be attributed to dismal domestic company-owned restaurant sales, a decline in North America commissary sales on weak volume, and soft international sales.

Earnings beat may have gone down well with investors as shares of Papa John’s gained 1.5% in the after-hours trading session on Aug 6. However, the company’s shares have grown 8.6% so far this year, underperforming the industry’s rally of 26.3%.



Global Restaurant Sales & Comps

In the second quarter, global restaurant sales moved down 3.8%, comparing favorably with the first quarter's decline of 5.5% but unfavorably with the year-ago quarter’s fall of 2.3%. Excluding foreign currency impact, global restaurant sales edged down 2.6% compared with the previous quarter’s decline of 3.7%. In the year-ago quarter, the metric gained 2.3%.

Domestic company-owned restaurant comps were down 6.8% in the reported quarter compared with a 7.2% decline in the year-ago quarter.

At North America franchised restaurants, comps fell 5.3% compared with a decline of 5.7% in the second quarter of 2018. Also, comps at system-wide North America restaurants moved down 5.7% compared with 6.1% decline recorded in the year-ago quarter.

Comps at system-wide international restaurants were up 0.3% against a decline of 0.8% in the prior-year quarter.

Operating Highlights

Total operating income was $14.2 million in the second quarter compared with operating income of $24.9 million in the year-ago quarter. Total costs and expenses amounted to $385.6 million, down 4.3% from second-quarter 2018.

Papa John's International, Inc. Price, Consensus and EPS Surprise


Balance Sheet

As of Jun 30, 2019, cash and cash equivalents totaled $30.7 million compared with $33.3 million as of Dec 30, 2018. Long-term debt was $349.7 million at the end of the second quarter of 2019 compared with $601.1 million at the end of 2018.

Inventories at the end of the reported quarter declined to $26.6 million from $27.2 million at the end of Dec 30, 2018. Free cash flow at the end of the second quarter of 2019 summed $8.9 million compared with $51.9 million at the end of 2018.

The company paid out cash dividends of $10.5 million in the second quarter of 2019 and declared second-quarter cash dividend of approximately $10.5 million.

2019 Guidance

Papa John's still expects adjusted earnings per share (EPS) of $1-$1.20, whereas the company reported $1.34 in 2018. While North America comps are expected to decline 1-4%, International comps are anticipated to be flat to up 3%. Capital expenditure of $45-$50 million is still expected for 2019.

Zacks Rank & Peer Releases

Papa John’s currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Darden (DRI - Free Report) reported fourth-quarter fiscal 2019 results, wherein earnings surpassed the Zacks Consensus Estimate, whereas revenues lagged the same. Adjusted earnings of $1.76 per share beat the Zacks Consensus Estimate of $1.73. Moreover, the bottom line grew 26.6% year over year on higher revenues.

Domino’s (DPZ - Free Report) reported mixed second-quarter 2019 financial numbers, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Its adjusted earnings were $2.19 per share, which outpaced the Zacks Consensus Estimate of $2.00. The metric also grew 19% on a year-over-year basis. The bottom-line improvement was driven by higher net income and lower diluted share count as a result of share repurchases.

Chipotle (CMG - Free Report) reported better-than-expected results in the second quarter of 2019. Its adjusted earnings of $3.99 per share surpassed the Zacks Consensus Estimate of $3.69 by 8.1%. The bottom line also grew 39% from the year-ago quarter, backed by rise in revenues and strong operating margins.

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