Papa John’s International (PZZA) is an American pizza chain founded in 1984. The company operates delivery and carry-out pizza restaurants across Latin America, North America, the Caribbean, the Middle East, Europe, and Asia with its headquarters in Kentucky, US.
Takeover Rumors Move Papa John’s Stock
Papa John’s stock jumped 18% on Feb. 13 after reports from Semafor suggested that a potential takeover might be on the horizon for America’s fourth-largest pizza chain. As per reports, Irth Capital Management has already discussed a potential takeover with its advisors.
Irth Capital Management revealed a 4.99% stake in Papa John’s last year.
Irth Capital Management was founded by Matthew Bradshaw and Sheikh Mohamed “Moe” al Thani, a member of the Qatari Royal family. Irth Capital’s strategy revolves around taking small stakes in public companies while eyeing a complete takeover. Co-founder Bradshaw might be looking to replicate his success taking Bojangles private in 2018 and mattress company Casper in 2021.
Interestingly, takeover speculation is not new for Papa John’s. The company was targeted by Nelson Peltz’s Trian Partners back in 2018. Then, activist investor Starboard made a strategic investment in the company in 2019.
About Papa John's Stock
PZZA stock has been buzzing since the latest takeover news as the stock popped 18% on Feb. 13 and is up 25% over the past month.
Despite this recent turnaround, the stock is still 37% below its 52-week high.
Papa John’s Tops Estimates
Papa John’s reported its third-quarter results back on Nov. 7. It posted a profit of $41.8 million or $0.43 per adjusted share. The company beats analysts’ $0.42-per-share estimate. On the revenue side of things, it posted a total of $506.8 million, a 3.1% decline year-over-year but comfortably beating analysts’ $491.8 million estimate.
The company cited lower international revenue due to the closure of company-owned outlets and franchising along with a drop in sales in domestic, company-owned outlets as the cause for the decline.
The fall in sales can be further understood by a 4.9% decline in same-store sales. The company has been artificially boosting its revenue by opening new stores instead of focusing on mitigating its same-store revenue decline.
The company ended the quarter with a cash balance of $17.55 million, down significantly from the $40.59 million recorded at the end of December 2023. Its free cash flow of $9 million was also down significantly from $76 million in the prior-year period.
Papa John’s is scheduled to release their fourth-quarter and full-year 2024 results before the market opens on Feb. 27, 2025.
Analysts’ Take on PZZA Stock
Analysts have a soft take on the stock with consensus “Moderate Buy” rating and a mean price target of $55.45 which signals 13% upside potential from current price levels. Its Street-high price target of $72 implies nearly 50% upside potential.
