Papa John's Plans To Open 5 Stores In Bahamas In 3 Years

Papa John's International, Inc. (NASDAQ:PZZA) announced that it will open five restaurants in Bahamas in the next three years. The first store will be opened in Nassau in the middle of 2018.

Shares of the company closed 4.1% higher at $60.1 yesterday. However, year to date, shares have lost 29.8% against the industry’s gain of 15.2%.

Strengthening International Expansion

The move seems to be part of the company’s bid to strengthen its international footprint.

International expansion has been the backbone of Papa John’s operations for quite some time now. Many of the company’s restaurants are located in international markets like Europe, the Middle East, Latin America and China, where they continue to perform strongly.

The third quarter of 2017 marked the 30th consecutive quarter of positive comps in the international segment. Currently, the company has 1660 restaurants in 44 countries. It is also planning to expand in Brazil, Honduras and Uruguay.

The brand has started to move into the Northern Africa region, anticipating opportunities therein and eventually intends to enter South Africa. Additionally, this pizza delivery chain has inked developmental agreements in Mexico, Egypt, Russia, Spain, Chile, the Netherlands, Colombia and Boston.

Papa John's International, Inc. Revenue (TTM)

Increasing Focus on Franchising

Papa John’s is exploring franchising opportunities in other Caribbean markets as well and also in Latin America. Over the next several years, the company plans to increase its international units, a large part of which will be franchised.

Notably, over 85% of the company’s restaurants are franchised, at present. We note that re-franchising a large chunk of its system reduces a company’s capital requirements and facilitates earnings per share growth and ROE expansion.

Further, an impressive free cash flow growth rate, allows reinvestment for increasing brand recognition and shareholder return. Moreover, since a major portion of its business is re-franchised, Papa John’s is less affected by inflation than its peers.

Zacks Rank and Stocks to Consider

Papa John's has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the same space are Famous Dave's of America, Inc. (NASDAQ:DAVE) , Arcos Dorados Holdings Inc. (NYSE:ARCO) and Good Times Restaurants, Inc. (NASDAQ:GTIM) .

While Famous Dave's of America sports a Zacks Rank #1 (Strong Buy), Arcos Dorados and Good Times Restaurants carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

One estimate for the current year moved north over the past 60 days versus no southward revisions in case of each of the three companies.

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