Shares of the world's third largest pizza delivery company, Papa John's International, Inc.PZZA hit a 52-week high of $86.68 on Nov 16. However, the company ended the day's trading a trifle lower at $85.59.
The company's shares have been climbing since it reported strong third-quarter 2016 results on Nov 1, with both the top and the bottom line surpassing the Zacks Consensus Estimate. Also, the pizza delivery chain raised its earnings guidance for 2016 and now expects earnings in the range of $2.46 to $2.52 per share, up from $2.35 to $2.45 projected previously. Since then, the stock has gained nearly 15%.
Notably, the company has been posting positive comps both in the domestic as well as international markets over the past several quarters. Going forward, the company is expected to maintain comps growth on the back of its focus on menu innovation and value offers.
Large scale international expansion has been the backbone of Papa John's operations of late. Currently, the company has more than 1500 international restaurants, with over 350 restaurants in 16 Latin American countries and intends to open the 5000th restaurant globally by the end of 2016. It is also planning to expand in Brazil, Honduras, Uruguay and the Bahamas.
The company has already inked restaurant development agreements in Mexico Russia, Spain, the Netherlands, opened stores in northeastern France and debuted in Israel, so far in 2016. In fact, Russia is also one of its top-performing international markets where the company plans to add 40 restaurants over the next eight years.
Also, the company's online and digital marketing activities have increased significantly over the past several years and should continue to boost revenues. Papa John's aims to continue investing in technology with focus on foundational improvements to its digital channels to increase order conversion rate, frequency and ticket average.
Moreover, Papa John's efforts to remove artificial flavors and synthetic colors from the entire menu are commendable and should appeal to health conscious customers.
PAPA JOHNS INTL Price and Consensus
However, Papa John's has considerable international presence and is therefore highly vulnerable to fluctuations in exchange rates. Further, higher costs and a soft consumer spending environment in the U.S. restaurant space raise concerns.
Zacks Rank & Other Stocks to Consider
Papa John's has a Zacks Rank #2 (Buy). Other favorably placed stocks in this sector include Domino's Pizza, Inc. DPZ , McDonald's Corp. MCD and The Wendy's Company WEN . While Domino's sports a Zacks Rank #1 (Strong Buy), Darden and Wendy's carry the same Zacks Rank as Papa John's. You can see the complete list of today's Zacks #1 Rank stocks here .
The Zacks Consensus Estimate for Domino's 2016 earnings moved up 2.4% over the last 60 days. Meanwhile, for full-year 2016, EPS is expected to improve 22.8%.
The Zacks Consensus Estimate for McDonald's 2016 earnings climbed nearly 2% over the last 60 days. The company's earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 6.16%.
Wendy's earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 28.38%. Further, for 2016, EPS is expected to grow 23.6%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today's most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report