Papa John's International, Inc
reported second quarter 2012 adjusted earnings of 61 cents per
share, beating the Zacks Consensus Estimate of 56 cents. The
adjusted earnings per share also surpassed the year-ago earnings of
47 cents by 29.8%.
PANERA BREAD CO (PNRA): Free Stock Analysis
PAPA JOHNS INTL (PZZA): Free Stock Analysis
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Total revenue jumped 8.5% year over year to $318.6 million and
surpassed the Zacks Consensus Estimate of $311.0 million. The
year-over-year improvement was attributable to higher comparable
restaurant revenues in both domestic and international markets, and
increase in number of units worldwide. Comparable system-wide
restaurant revenue rose 5.7% and 6.1% in North America and in the
international markets, respectively.
Domestic company-owned restaurant revenue improved 12.4% to $15.9
million, signifying an increase of 7.4% in comparable revenue and
acquisition activity during the quarter.
Hike in net franchise units and comparable franchised restaurants
revenue growth of 5.1% resulted in a 5.5% rise in North America
franchise royalty revenue to $1.0 million. Domestic commissaries
revenue upped 4.6% year over year to $5.6 million, primarily due to
a hike in sales volume. International revenues surged 21.8% year
over year to $3.1 million, due to higher number of restaurants
opened and comparable system-wide revenue growth.
In the quarter under review, Papa John's company-owned restaurant
expenses and domestic commissary and other expenses rose 12.2% to
$115.4 million and 1.4% to $127.1 million, respectively. General
and administrative (G&A) expenses jumped 13.9% year over year
to $31.5 million. Operating income also increased 27.0% year over
year to $24.3 million.
Acquisitions and Dispositions
Since April 23, 2012, Papa John's acquired 56 franchised
restaurants in the Denver and Minneapolis markets for $5.2 million.
Consequently, the company refranchised six of the total acquired
Consistent with its unit growth momentum, Papa John's opened 67
restaurants and closed 27 restaurants, representing a worldwide
increase of 6.4%. As of June 24, 2012, Papa John's had 3,973
restaurants in 50 states across 33 countries.
By the next six years, the company expects to open approximately
1,500 restaurants, including 300 in North America and 1,200 in the
At quarter end, Papa John's had cash and cash equivalents of $33.6
million. The long-term debt and shareholders' equity stood at $50.0
million and $225.5 million, respectively.
During the quarter, the company repurchased 0.6 million shares for
$24.9 million. Subsequent to end of the quarter through July 26,
2012, the company repurchased 0.3 million shares for $13.6 million.
Based on the strong second quarter results, Papa John's increased
its earnings per share and domestic and international system-wide
comps guidance. The company now expects full-year 2012 earnings per
share in the range of $2.45-$2.55, up from the previous projection
of $2.40-$2.50. One extra week of operation in fiscal 2012 is
projected to benefit earnings by 8 cents to 10 cents per share and
offset the expected decrease in earnings from Incentive
Contribution in 2012.
The North America system-wide comparable revenue is projected to
increase in the range of 2.0% to 3.0%, up from the earlier guidance
of 1.5% to 2.5%. The international comparable revenue is expected
to increase in the range of 4.0% to 5.5%, up from the previous
guidance of 2.5% to 4.5%. However, the company reiterated its total
revenue growth outlook increase to be in the range of 6% to 7%.
We remain encouraged by the company's long and successful track
record, viable business strategy and strong balance sheet. Based on
these, we expect analysts to revise their estimates upward in the
coming days. The Zacks Consensus Estimates for 2012 and 2013 are
currently pegged at $2.52 and $2.87, respectively.
One of Papa John's peers -
Panera Bread Co. (
- recently reported second-quarter 2012 earnings of $1.50 per
share, surpassing the Zacks Consensus Estimate of $1.39. Papa
John's currently carries a Zacks #1 Rank, implying a short-term
strong Buy rating. We also reiterate our long-term Outperform
recommendation on the stock.