Papa John's International Inc. PZZA is set to report first quarter 2015 results on May 5, 2015. Last quarter, the company posted a positive earnings surprise of 4.00%. Let's see what is in store this quarter.
Factors to Consider This Quarter
Papa John's has been delivering positive comps domestically as well as in the international markets over the past few quarters. The company’s brand revitalization initiatives such as unit expansion, menu innovation and international expansion have contributed significantly to its comps growth.
Also, the company is investing in technology-driven initiatives like digital ordering in order to capitalize on the digital wave that has hit the U.S. fast casual restaurant sector. These initiatives are expected to positively impact first-quarter results.
Papa John is investing in labor and other resources related to the rollout of its new in-store operating system ‘FOCUS.’ However, the costs incurred to execute this initiative are likely to dent profits in the soon-to-be reported quarter. Meanwhile, higher insurance and labor costs are expected to continue to keep profits under pressure.
Also, like other restaurants, rising food costs remain a headwind for the company.
Earnings Whispers?
Our proven model does not conclusively show that Papa John is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 52 cents. Hence, the difference is 0.00%.
Zacks Rank #3 (Hold): Papa John’s Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.
Note that Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
Stocks to Consider
Here are a few companies in the restaurant industry worth considering which, as per our model, have the right combination of elements to post an earnings beat this quarter:
Red Robin Gourmet Burgers Inc. RRGB with an Earnings ESP of +4.55% and a Zacks Rank #2 (Buy).
Bloomin' Brands, Inc. BLMN with an Earnings ESP of +1.85% and a Zacks Rank #3.
Chuy's Holdings, Inc. CHUY with an Earnings ESP of +6.25% and a Zacks Rank #3.
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