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Papa John's Shares Up on Buzz of Appointing Investor Banks

Shares of Papa John's International, Inc.PZZA have increased nearly 5% on Aug 24, following a few reports about the company hiring two banks to stabilize its business. Per media sources, this renowned pizza giant has appointed Bank of America Corporation BAC and Lazard Ltd LAZ to formulate strategies that would reinvigorate the company's sales.

Per rumors, Papa John's is facing some takeover interest from other companies and private equity firms of late.

Apart from witnessing a consistent decline in revenue trends, Papa John's has been under the spotlight of negative publicity after its ex-CEO, John Schnatter has been publicly denounced for making a racist comment. Ever since Papa John's has been relentlessly trying to distance itself from Schnatter, and craft various ways to regain its brand image and sales trend.

Notably, a look at Papa John's price trend revealed that the stock had an unimpressive run on the bourses in the past year. Shares of the company have lost 41.9% against the industry 's collective growth of 6.1% during the same time frame.

Efforts to Revive Brand Image

The current rumor goes in line with Papa John's consistent efforts in framing strategies that would revive its brand image and bolster growth. To this end, the company also undertook an assistance program for its U.S. and Canada franchisees. Under the assistance program, it planned on reducing royalties, food-service pricing and online fees throughout the current year.

Further, the company has been arranging funds for its franchises to implement marketing and reimaging initiatives.

Declining Sales Trend Concerns

In the last reported quarter, the company's revenues declined 6.2% on a year-over-year basis. The downside can be attributed to a dismal domestic company-owned restaurant sales and the decline in North America commissary sales on weak volumes.

In the second quarter, global restaurant sales decreased 2.3% compared unfavorably with the last-reported quarter's decline of 1.3%. It also declined against the year-ago quarter's growth of 4.1%. Domestic company-owned restaurant comps were down 6.1% compared with comps growth of 3% in the year-ago quarter.

Comps at North America franchised restaurants fell 7.2%, comparing unfavorably with comps growth of 2.3% in the second quarter of 2017. Comps at system-wide North American franchised restaurants decreased 5.7% compared with 1.1% comps growth in the year-ago quarter. Comps at system-wide international restaurants were down 0.8% compared with comps growth of 3.9% in the prior-year quarter.

Zacks Rank & A Stock to Consider

Papa John's currently carries a Zacks Rank #5 (Strong Sell). A Zacks Rank #1 (Strong Buy) stock in the U.S. restaurant space is BJ's Restaurants BJRI . BJ's Restaurants' earnings for the current year are expected to increase 50.4%. You can see the complete list of today's Zacks #1 Rank stocks here .

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Bank of America Corporation (BAC): Free Stock Analysis Report

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Papa John's International, Inc. (PZZA): Free Stock Analysis Report

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


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

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