Papa Johns International Inc (NASDAQ: PZZA)

Sector: Consumer Cyclical Industry: Restaurants CIK: 0000901491
Market Cap 1.27 Bn
P/B -2.88
P/E 33.90
P/S 0.61
ROIC (Qtr) 13.12
Div Yield % 5.90
Rev 1y % (Qtr) 0.27
Total Debt (Qtr) 950.16 Mn
Debt/Equity (Qtr) -2.16

About

Papa John's International Inc., commonly referred to as Papa John's, operates in the food service industry, specifically as a global pizza delivery and carryout restaurant chain. The company has a presence in 50 countries and territories, with a total of 5,906 restaurants as of December 31, 2023. These restaurants are categorized into 648 company-owned and 5,258 franchised establishments. Papa John's generates revenue mainly through the sale of pizza, desserts, and beverages, as well as franchise and development fees. The company's menu features...

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Price action

Investment thesis

Bull case

  • Operating cash flow of 156.94M provides exceptional 839.25x coverage of minority interest expenses 187000, showing strong core operations.
  • Tangible assets of 816.65M provide exceptional 26.21x coverage of deferred revenue 31.16M, showing strong service capability backing.
  • Operating cash flow of 156.94M provides strong 5.04x coverage of deferred revenue 31.16M, indicating service delivery capability.
  • Cash position of 38.97M provides exceptional 208.41x coverage of minority interest expenses 187000, indicating strong liquidity.
  • Tangible assets of 816.65M provide robust 4.03x coverage of other current liabilities 202.53M, indicating strong asset backing.

Bear case

  • Operating cash flow of 156.94M barely covers its investment activities of (62.41M), with a coverage ratio of -2.51, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 156.94M provides thin coverage of dividend payments of (60.99M) with a -2.57 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • High receivables of 108.20M relative to inventory of 35.76M (3.03 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating earnings of 93.97M show weak coverage of depreciation charges of 78.95M, with a 1.19 ratio indicating high capital intensity and potential reinvestment needs.
  • Operating cash flow of 156.94M barely covers operating expenses of (159.73M) with a -0.98 ratio, suggesting thin operational efficiency margins and limited flexibility.

Peer comparison

Companies in the Restaurants
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MCD Mcdonalds Corp 222.05 Bn 26.39 8.45 55.82 Bn
2 SBUX Starbucks Corp 95.51 Bn 51.45 2.57 26.61 Bn
3 CMG Chipotle Mexican Grill Inc 50.94 Bn 33.15 4.32 4.98 Bn
4 YUM Yum Brands Inc 43.17 Bn 29.83 5.36 11.55 Bn
5 QSR Restaurant Brands International Inc. 22.43 Bn 24.33 2.42 15.64 Bn
6 DRI Darden Restaurants Inc 21.91 Bn 19.91 1.77 6.16 Bn
7 YUMC Yum China Holdings, Inc. 18.12 Bn 20.05 1.57 1.84 Bn
8 DPZ Dominos Pizza Inc 14.57 Bn 24.72 3.01 5.05 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.49 2.05
EV to Cash from Ops. EV/CFO 14.02 16.57
EV to Debt EV to Debt 2.32 4.75
EV to EBIT EV/EBIT 23.41 3.45
EV to EBITDA EV/EBITDA 12.71 9.76
EV to Free Cash Flow [EV/FCF] EV/FCF 27.76 29.06
EV to Market Cap EV to Market Cap 1.74 6.55
EV to Revenue EV/Rev 1.05 2.40
Price to Book Value [P/B] P/B -2.88 -1.40
Price to Earnings [P/E] P/E 33.90 13.35
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.60 -9.56
Dividend Payout Ratio % Div Payout % (Qtr) 160.00 18.72
Dividend per Basic Share Div per Share (Qtr) 1.84 0.84
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 76.35 30.41
Interest Coverage Int. cover (Qtr) 2.31 -86.85
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -6.92 -24.56
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 122.06 35.50
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -0.72
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -47.61 -564.81
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -27.73 25.78
EBIT Growth (1y) % EBIT 1y % (Qtr) -44.34 -507.68
EBT Growth (1y) % EBT 1y % (Qtr) -57.12 -41.98
EPS Growth (1y) % EPS 1y % (Qtr) -60.34 -126.51
FCF Growth (1y) % FCF 1y % (Qtr) 60.59 5,724.78
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 6.37 23.70
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 2.36 0.99
Cash Payout Ratio Cash Payout (Qtr) 0.26 0.07
Cash Ratio Cash Ratio (Qtr) 0.13 0.78
Current Ratio Curr Ratio (Qtr) 0.87 1.47
Debt to Equity Ratio Debt/Equity (Qtr) -2.16 0.05
Interest Cover Ratio Int Coverage (Qtr) 2.31 -86.85
Times Interest Earned Times Interest Earned (Qtr) 2.31 -86.85
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 8.30 7.71
EBIT Margin % EBIT Margin % (Qtr) 4.50 -2.27
EBT Margin % EBT Margin % (Qtr) 2.56 -1.97
Gross Margin % Gross Margin % (Qtr) 9.00 34.04
Net Profit Margin % Net Margin % (Qtr) 1.80 -3.69