Papa John’s International, Inc. PZZA posted sluggish second-quarter 2015 results wherein both earnings and revenues missed the respective Zacks Consensus Estimate. Share price dropped 5.8% in after-hours trading in response to the results.
Adjusted earnings of 47 cents per share missed the Zacks Consensus Estimate of 49 cents by 4.1%. However, earnings increased 17.5% year over year driven by improvement in revenues.
Revenues of $399 million also missed the consensus mark of $406 million by 1.7%. However, revenues increased 4.8% year over year backed by sales growth in North America and international segments. Other sales also increased, primarily led by the point-of-sale system – FOCUS – equipment sales to franchisees.
Behind the Headline Numbers
Total revenue at North America segment was $372.7 million, up 4.9% year over year. The upside was 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 5.5%, lower than the year-ago comps growth of 6% and 6.5% in the last quarter.
International revenues were $26.3 million, up 2.9% year over year, backed by anincrease in Royalties and franchise and development fees and Restaurant and commissary sales. Meanwhile, comps at system-wide international restaurants increased 6.8%, lower than comps growth of 8.6% a year ago and 7.7% in the first quarter.
Total costs and expenses were $367.9 million, up 4% year over year due to 6.9% increase in total domestic company-owned restaurant expenses and 25% rise in general and administrative expenses, partly offset by 2.8% decrease in total domestic commissary expenses.
Guidance for 2015 Up
Papa John’s raised its earnings guidance for 2015 to a range of $2.04 to $2.10 from $2.00 to $2.08. this is the second consequetive quarter that the company has increased its earnings guidance.
On a constant dollar basis, International comparable sales are expected to increase in the range of 6% to 8% up from 5% to 7%.
Stocks to Consider
Papa John’s presently has a Zacks Rank #3 (Hold). Some stocks in the restaurant industry that can be considered are BJ's Restaurants, Inc. BJRI, Dave & Buster's Entertainment, Inc. PLAY and Ruby Tuesday, Inc. RT. All these stocks sport a Zacks Rank #1 (Strong Buy).
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