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 .

Wall Street's Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It's a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

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

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

Lazard Ltd (LAZ): Free Stock Analysis Report

BJ's Restaurants, Inc. (BJRI): Free Stock Analysis Report

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

To read this article on click here.

Zacks Investment Research

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.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.