Papa John’s International (PZZA) reported stronger-than-expected Q2 results, topping both earnings and revenue estimates driven by new unit openings, and robust performance across domestic and international regions. Shares of the American pizza restaurant franchise have gained almost 22% over the past year.
Adjusted earnings of $0.93 per share almost doubled year-over-year, and beat analysts’ expectations of $0.70 per share in Q2. The company reported earnings of $0.48 per share in the prior-year period.
In other positive news, revenues jumped 11.8% year-over-year to $515 million, and exceeded consensus estimates of $490.58 million. The increase in revenues reflected a 5.2% surge in comparable sales in North American restaurants.
On top of this, comparable sales surged 21.2% internationally. (See Papa John’s International stock charts on TipRanks)
Papa John’s CEO Rob Lynch commented, “Papa John’s strong brand and highly-attractive unit economics are driving accelerated restaurant openings by both new and existing franchisees, resulting in a record 123 net unit openings in the first half of 2021. In addition to growing AUVs, development is now a significant component of rising system-wide sales.”
Ahead of the company’s Q2 results, UBS analyst Dennis Geiger increased the price target on Papa John’s from $104 to $114 (2.7% downside potential) but reiterated a Hold rating.
Geiger believes more catalysts are required to create potential upside to the current stock price despite the continuous same-store sales growth momentum resulting from various brand initiatives and macro tailwinds.
Overall, the stock has a Strong Buy consensus rating based on 10 Buys and 1 Hold. The average Papa John’s International price target of $120.45 implies 4.6% upside potential from current levels.
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