Papa John’s International, Inc. PZZA recently posted better-than-expected first-quarter 2015 results wherein both earnings and revenues beat the respective Zacks Consensus Estimate. Share price rose 5.2% in afterhours trading as the pizza delivery company raised its revenue and North America comps guidance for 2015.
Adjusted earnings of 55 cents per share beat the Zacks Consensus Estimate of 52 cents by 5.8% and increased 22.2% year over year driven by improvement in revenues.
Revenues of $432.3 million also beat the consensus mark of $415 million by 4.2% and increased 7.7% year over year backed by revenue improvement in North America and international segments.
Behind the Headline Numbers
Total revenue at North America were $406.9 million, up 7.7% year over year, driven by increase in Domestic company-owned restaurant sales, North America franchise royalty revenues, Franchise and development fees, and Other sales.
Comps at system-wide North American restaurants were up 6.5%, lower than the year-ago comps growth of 9.6%. However, it compared favorably with the prior-quarter comps growth of 4.1%.
International revenues were $25.4 million, up 7.6% year over year, attributable to increase in Royalties and franchise and development fees and Restaurant and commissary sales. Meanwhile, comps at system-wide international restaurants increased 7.7% that compared favorably from comps growth of 6.4% in the year-ago quarter but unfavorably with prior-quarter comps growth of 8.9%.
Total costs and expenses were $394.6.0 million, up 6.8% year over year due to 8% increase in total domestic company-owned restaurant expenses, partly offset by 1.4% decrease in total domestic commissary expenses.
FOCUS Update
As of Mar 29, 2015, the company had implemented its new, proprietary point-of-sale system in almost all domestic restaurants. The impact of implementing FOCUS was a $1.8 million reduction in income before income taxes in the first quarter of 2015, or a 3-cent reduction in earnings per share.
Guidance for 2015
The company raised its earnings guidance for 2015 to a range of $2.00 to $2.08 from the prior guidance of $1.98 to $2.06.
On a constant dollar basis, North America system-wide comps are expected to increase in the range of 3% to 5%, up from the prior 2% to 4%, while International comparable sales are expected to increase in the range of 5% to 7% in 2015.
Other Stocks to Consider
Papa John’s presently has a Zacks Rank #2 (Buy). Other stocks in the restaurant industry that can be considered include BJ's Restaurants, Inc. BJRI, Darden Restaurants, Inc. DRI and Ruby Tuesday, Inc. RT. All these stocks sport a Zacks Rank #1 (Strong Buy).
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