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1. Company Snapshot

1.a. Company Description

Papa John's International, Inc.operates and franchises pizza delivery and carryout restaurants under the Papa John's trademark in the United States and internationally.It operates through four segments: Domestic Company-Owned Restaurants, North America Commissaries, North America Franchising, and International Operations.


The company also operates dine-in and delivery restaurants under the Papa John's trademark internationally.As of December 26, 2021, it operated 5,650 Papa John's restaurants, which included 600 company-owned and 5,050 franchised restaurants in 50 countries and territories.The company was founded in 1984 and is based in Louisville, Kentucky.

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1.b. Last Insights on PZZA

Papa John's International, Inc.'s recent performance was negatively impacted by lower comparable sales and transaction volumes, resulting in decreased International and Domestic company-owned restaurant sales. The company's Q4 fiscal 2024 results reflect a decline in sales, partly due to lower customer traffic and reduced average ticket prices. Additionally, the company's efforts to gain market share have been hindered by increased competition and changing consumer preferences.

1.c. Company Highlights

2. Papa John's Delivers Mixed Results, Outlines Transformation Strategy

Papa John's reported total consolidated revenue of $508 million for the third quarter, essentially flat compared to the previous year. The company's global system-wide restaurant sales were $1.21 billion, up 2% in constant currency. However, North America comparable sales decreased 2.7%, driven by a decline in orders from small ticket web customers. The actual EPS came out at $0.32, missing estimates of $0.4. Consolidated adjusted EBITDA declined slightly to $48 million. The company's global comparable sales were flat for the quarter, with international business delivering exceptional results with 7% comparable sales growth.

Publication Date: Nov -26

📋 Highlights
  • International Sales Growth:: 7% comparable sales increase in international markets, driven by UK transformation and China initiatives.
  • Supply Chain Savings:: $50M in savings by 2028, with $20M targeted for 2026 from North America supply chain optimization.
  • Balance Sheet Strength:: $502M in available liquidity and 3.4x gross leverage ratio, supporting strategic initiatives and closures.
  • Efficiency Initiatives:: $25M in G&A savings over 2 years, with $20M from non-marketing expense reduction by 2026-2027.
  • Refranchising & Closures:: Accelerated refranchising plan and NA closures at 1.5–2% in 2025, offset by 85–95 new NA restaurants.

Segment Performance

The North America segment faced challenges, with a decline in comparable sales. However, the company is taking steps to address this, including optimizing its supply chain, which is expected to result in at least $50 million in supply chain savings by 2028. Internationally, Papa John's saw strong results, driven by a multiyear journey in the UK and transformation in China. The company is focusing on priority trade zones, product execution, and its Perfect Bake program.

Transformation Strategy

Papa John's is executing its transformation strategy to become a more nimble, efficient organization with a leaner G&A structure. The company has announced two new efficiency initiatives: a comprehensive review of its expense structure to streamline the organization and reduce noncustomer-facing spend, with at least $25 million of savings outside of marketing to be captured across fiscal years 2026 and 2027, and accelerating its refranchising program over the next two years. As Ravi Thanawala mentioned, the company is positioning itself to compete better in 2026 and beyond by aligning its system around a more comprehensive value proposition.

Valuation and Outlook

With a P/E Ratio of 35.91 and an EV/EBITDA of 10.2, the market is pricing in a certain level of growth for Papa John's. However, analysts estimate next year's revenue growth at -1.7%, which may indicate that the stock is overvalued. The company revised its outlook for 2025, expecting global system-wide sales to increase between 1% and 2%. Papa John's has a strong balance sheet with $502 million in available liquidity and a gross leverage ratio of 3.4x, which should support its plans for growth and investment.

Growth Initiatives

The company is focused on driving sustainable, profitable growth through innovation, addressable market expansion, and a more efficient supply chain. Papa John's is rebuilding its innovation pipeline, including reimagining its sides offering, and plans to drive growth through innovation, particularly in sides and add-ons, while avoiding complexity. The company aims to bring in lapsed customers and drive frequency through an improved consumer experience.

3. NewsRoom

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Papa John’s International, Inc. (NASDAQ:PZZA) Receives Average Rating of “Hold” from Brokerages

Dec -04

Source: defenseworld.net

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Papa Johns Completes Strategic Refranchising and New Restaurant Development Agreement with Franchisee Chris Patel of Pie Investments

Nov -25

Source: businesswire.com

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Papa Johns Promotes Ravi Thanawala to Chief Financial Officer and President, North America

Nov -18

Source: businesswire.com

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Exclusive: Activist investor Irenic builds stake in Papa John's, sources say

Nov -14

Source: reuters.com

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Papa John's $2.7 Billion Takeover Bid: A Price on Untapped Value

Nov -12

Source: marketbeat.com

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Papa John's Is Still A Buy Without A Buyout Offer

Nov -11

Source: seekingalpha.com

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Papa John's stock higher on go-private report

Nov -10

Source: proactiveinvestors.com

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Papa John's International, Inc. (PZZA) Q3 2025 Earnings Call Transcript

Nov -06

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.12%)

6. Segments

North America Commissaries

Expected Growth: 2.5%

Papa John's North America Commissaries' 2.5% growth driven by increasing demand for convenience and quality food, expansion of online ordering and delivery services, and strategic partnerships with third-party aggregators. Additionally, the company's focus on menu innovation, marketing efforts, and operational efficiencies contribute to the growth.

Domestic Company-owned Restaurants

Expected Growth: 1.8%

Papa John's domestic company-owned restaurants' 1.8% growth is driven by increased same-store sales, successful marketing campaigns, and strategic menu pricing. Additionally, the company's focus on digital transformation, including online ordering and mobile app enhancements, has contributed to the growth. Furthermore, the brand's efforts to improve customer experience and loyalty programs have also positively impacted sales.

All Others

Expected Growth: 1.2%

All Others segment from Papa John's International, Inc. grew 1.2% driven by increased sales from online ordering and mobile apps, expansion of delivery services, and strategic partnerships. Additionally, the company's focus on digital marketing and customer loyalty programs contributed to the growth.

International

Expected Growth: 2.2%

Papa John's International, Inc.'s 2.2% international growth is driven by increasing demand for convenience food, expansion into new markets, and strategic partnerships. Additionally, the company's focus on digital transformation, menu innovation, and customer experience enhancements are contributing to its growth momentum.

North America Franchising

Expected Growth: 2.8%

Papa John's North America Franchising growth of 2.8% is driven by increasing same-store sales, expansion of digital ordering capabilities, and strategic marketing efforts. Additionally, the company's focus on improving customer experience, menu innovation, and loyalty programs contribute to the growth. Furthermore, the brand's reputation for quality and convenience also supports the segment's growth.

7. Detailed Products

Papa John's Pizza

Hand-tossed, fresh, and high-quality pizzas made with 100% real cheese and a variety of toppings

Sides

Variety of sides including garlic knots, breadsticks, and chicken wings

Desserts

Sweet treats like chocolate chip cookies and brownies

Beverages

Soft drinks, iced tea, and bottled water

Delivery and Carryout

Convenient delivery and carryout options for customers

Catering

Customizable catering options for events and parties

8. Papa John's International, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Papa John's faces moderate threat from substitutes as customers have various alternatives for pizza, including cooking at home, ordering from other restaurants, or purchasing pre-made pizzas from grocery stores.

Bargaining Power Of Customers

Papa John's customers have high bargaining power due to the competitive nature of the pizza industry, allowing them to easily switch to competitors if they are not satisfied with the product or service.

Bargaining Power Of Suppliers

Papa John's suppliers have low bargaining power due to the company's large scale of operations and ability to negotiate favorable prices with suppliers.

Threat Of New Entrants

The threat of new entrants is low for Papa John's due to the high barriers to entry in the pizza industry, including the need for significant capital investment and established brand recognition.

Intensity Of Rivalry

The intensity of rivalry in the pizza industry is high, with Papa John's competing against established brands such as Domino's and Pizza Hut, as well as smaller, regional players.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 238.52%
Debt Cost 5.80%
Equity Weight -138.52%
Equity Cost 9.73%
WACC 0.36%
Leverage -172.19%

11. Quality Control: Papa John's International, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

41.62$

Current Price

41.62$

Potential

0.00%

Expected Cash-Flows