Fast-food pizza chain Papa John’s (NASDAQ:PZZA) fell short of analysts' expectations in Q1 CY2024, with revenue down 2.5% year on year to $513.9 million. It made a non-GAAP profit of $0.67 per share, down from its profit of $0.68 per share in the same quarter last year.
Is now the time to buy Papa John's? Find out by reading the original article on StockStory, it's free.
Papa John's (NASDAQ:PZZA) Q1 CY2024 Highlights:
- Revenue: $513.9 million vs analyst estimates of $543.1 million (5.4% miss)
- EPS (non-GAAP): $0.67 vs analyst estimates of $0.56 (19.1% beat)
- Gross Margin (GAAP): 31.4%, in line with the same quarter last year
- Free Cash Flow was -$1.07 million, down from $40.4 million in the previous quarter
- Same-Store Sales were down 2% year on year (miss)
- Store Locations: 5,914 at quarter end, increasing by 189 over the last 12 months
- Market Capitalization: $1.88 billion
Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ:PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”.
Traditional Fast FoodTraditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.
Sales GrowthPapa John's is larger than most restaurant chains and benefits from economies of scale, giving it an edge over its smaller competitors.
As you can see below, the company's annualized revenue growth rate of 5.7% over the last five years was weak , but to its credit, it opened new restaurants and expanded its reach.
This quarter, Papa John's missed Wall Street's estimates and reported a rather uninspiring 2.5% year-on-year revenue decline, generating $513.9 million in revenue. Looking ahead, Wall Street expects sales to grow 3.8% over the next 12 months, an acceleration from this quarter.
Same-Store SalesSame-store sales growth is a key performance indicator used to measure organic growth and demand for restaurants.
Papa John's demand has been shrinking over the last eight quarters, and on average, its same-store sales have declined by 0.9% year on year. This performance isn't ideal and the company should reconsider its growth strategy before opening new restaurants with its precious capital.
In the latest quarter, Papa John's same-store sales fell 2% year on year. This decrease was a further deceleration from the 1.5% year-on-year decline it posted 12 months ago. We hope the business can get back on track.
Key Takeaways from Papa John's Q1 Results Papa John's same-store sales and revenue unfortunately missed analysts' expectations. On the other hand, operating profit beat. Zooming out, we think this was a mixed quarter. The stock is flat after reporting and currently trades at $56.9 per share.
