Will Papa John's (PZZA) Beat Earnings Estimates in Q2? - Analyst Blog


One of the leading pizza delivery companies, Papa John's International Inc. ( PZZA ) is set to report second-quarter 2014 results on Aug 5, 2014. In the last quarter, the company posted in- line results. Let's see how things are shaping up for the upcoming announcement.

Why a Likely Positive Surprise?

Our proven model shows that Papa John's is likely to beat earnings because it has the right combination of two key components.

Zacks ESP: Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +4.88%. This is very meaningful and a leading indicator of a likely positive earnings surprise for the company.

Zacks Rank: Papa John's has a Zacks Rank #2 (Buy). Note that stocks with Zacks Ranks #1 (Strong Buy), #2 (Buy) and #3 (Hold) have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of Papa John's Zacks Rank #2 and ESP of +4.88% makes us confident of an earnings beat on Aug 5.

What is Driving the Better Than Expected Earnings?

Papa John's' has been consistently delivering positive comps domestically as well as in the international markets over the past few quarters. The company's brand revitalization initiatives such as unit expansion and international expansion have contributed significantly to its comps growth.

The company is also investing in technology-driven initiatives like digital ordering in order to capitalize on the digital wave that has hit the U.S. fast casual restaurant sector. As a matter of fact, total domestic digital sales were more than 45% in the first quarter.

Moreover, limited time offerings and menu innovation continue to play an important part in generating revenues. We expect these initiatives to continue to drive sales in the second quarter as well.

Other Stocks to Consider

Here are some other companies in the restaurant sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Zoe's Kitchen, Inc. ( ZOES ), with an Earnings ESP of +50.0% and a Zacks Rank #2.

Jack in the Box Inc. ( JACK ), with an Earnings ESP of +3.51% and a Zacks Rank #3.

Texas Roadhouse, Inc. ( TXRH ), with an Earnings ESP of +3.03% and a Zacks Rank #3.

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PAPA JOHNS INTL (PZZA): Free Stock Analysis Report

JACK IN THE BOX (JACK): Free Stock Analysis Report

TEXAS ROADHOUSE (TXRH): Free Stock Analysis Report

ZOES KITCHEN (ZOES): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: PZZA , JACK , TXRH , ZOES



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