Yahoo Finance Papa John's Cruises Past Earnings Estimates on Strong Pizza Demand
- By Graham Griffin
Pizza chain and franchise giant Papa John's International Inc. (NASDAQ:PZZA) revealed strong earnings and revenue that beat analyst estimates on Thursday.
For the first quarter, the company reported a 24.9% increase in total revenue to $511.7 million that surpassed Refinitiv analysts' estimates of $471 million. Adjusted earnings per share jumped to 90 cents compared to 15 cents the year prior and smashed estimates of 56 cents per share.
"Papa John's started 2021 strongly, delivering our sixth straight quarter of industry outperformance and fourth of double-digit global sales growth. In addition, our unit growth accelerated, and we achieved 600 basis points of operating margin expansion, growing adjusted earnings per share 500%," President and CEO Rob Lynch said. "This momentum is a result of the hard work of our team members and the strength of our franchise system, who together have delivered sustainable business growth over the past seven quarters, reversing the prior six quarters of global restaurant sales declines."
Compared to the year-ago quarter, comparable sales grew by 26.2% in the company's North America region. International comparable sales also grew by 23.2% and the company credited the growth to continued menu innovation with items like the Epic Stuffed Crust pizza and an expanding customer base.
Overall operations grew by 1.3% with net unit growth of 68 new units. The international segment made up the majority of the growth with 59 new stores opened. Papa John's (NASDAQ:PZZA) now has operations in 50 countries and territories and established its first new units in Germany and Cambodia. The report also specified 1,650 restaurants in the pipeline for development, which are expected to open over the next six years.
Consolidated operating income grew $31.4 million compared to the first quarter of 2020 to a total of $46.9 million. The report cited strong operating leverage and expense control on higher comparable sales both domestically and internationally.
Adjusted diluted earnings per share saw a large jump to 90 cents compared to 15 cents the year prior. In the calculation, "special items" of $3.9 million dedicated toward strategic reorganization and the company's new office in Atlanta have been excluded.
The company paid both common and preferred stock dividends of $10.8 million during the first quarter. Second-quarter dividends of approximately $10.9 million were also announced to be paid out to common shareholders by the end of May.
On May 6, the stock was trading at $101.52 per share, up 8%, with a market cap of $3.34 billion. The GF Value Line shows the shares trading at a significantly overvalued rating.
Top gurus invested in Papa John's include Jim Simons (Trades, Portfolio)' Renaissance Technologies, Joel Greenblatt (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio).
Disclosure: Author owns no stocks mentioned.
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
This article first appeared on GuruFocus.
