Papa John’s International (PZZA), the country’s fourth-largest pizza chain, is now the talk of the town with takeover rumors swirling, according to Semafor. On Thursday, Feb. 13, PZZA stock edged up 18.4% after reports surfaced that Qatar-based investment firm Irth Capital Management was eyeing a bid to take the pizza chain private. The fund already holds a 4.99% stake, just shy of the disclosure threshold.
Private equity firms are feasting on struggling-yet-recognizable brands, and Irth Capital, known for acquisitions like Bojangles and Casper, has a history of breathing new life into companies. But with inflation, changing consumer habits, and fierce competition slicing into profits, the stakes are high.
About Papa John’s Stock
Founded in 1984 and headquartered in Louisville, Kentucky, Papa John’s International (PZZA) is a global pizza powerhouse. The company operates through a combination of company-owned locations and franchises, with stores in the U.S. and around the world. With a market cap of $1.6 billion, it is a major player in the quick-service restaurant industry.
The past year has been tough for PZZA, with the stock slumping 32% over the past 52 weeks. But 2025 is shaping up differently. The stock has surged 21% this year, with a nearly 28% gain in the past month. Buyout rumors have lit a fire under PZZA, adding fuel to its fire.
Despite its recent surge, PZZA’s valuation remains surprisingly low. At 19.9 times forward earnings and 0.76 times sales, the stock is trading well below historical averages and peers like Domino’s Pizza (DPZ), signaling that it could be undervalued with substantial upside yet to be realized.
Papa John’s Beats Q3 Projections
Papa John’s Q3 earnings, released on Nov. 7, revealed a mixed picture of its financial performance. Sales dipped 3.1% to $506.8 million, yet the numbers still beat expectations. Adjusted EPS tumbled 18.9% to $0.43 but edged past projections by 2.4%.
Expansion remains a bright spot, with the chain now boasting 5,908 restaurants across 49 countries and territories. Operating income surged to $65 million, thanks to property sales, but adjusted operating income slipped from $33.6 million to $29.3 million.
Looking ahead, Papa John’s is sharpening its strategy, betting on digital innovation and a stronger value perception to reignite growth. With Q4 earnings set to be released on Thursday, Feb. 27, management remains confident that 2025 will bring steady improvements as strategic moves take hold.
International comparable-store sales are expected to decline in 2024. The company’s transformation plan, including United Kingdom refranchising, is shaping up as a key profit driver. Operating income is projected between $135 million and $150 million, bolstered by fixed commissary margins and North American expansion. With an ambitious goal of up to 190 global additions, the company is leaning on franchise partners to accelerate growth and strengthen its global footprint.
Analysts tracking Papa John’s expect the company to report $519.7 million in Q4 revenue, with EPS sliding to $0.48, a sharp 47.3% drop from last year. EPS is projected at $2.19 for the full year, down 19.2%. But the long game holds promise. For 2025, the bottom line is anticipated to surge by 9.1% to $2.39 per share, signaling a potential turnaround.
What Do Analysts Expect for Papa John’s Stock?
Papa John’s is sizzling on Wall Street, and Stephens analyst Jim Salera backed the momentum recently with an “Overweight” rating and a $60 target. Overall, PZZA has a solid “Moderate Buy” consensus rating. Out of the 14 analysts in coverage, six recommend a “Strong Buy,” and the remaining eight analysts are playing it safe with a “Hold” rating.
Meanwhile, the pizza chain stock’s mean price target of $55.45 suggests that it could rally as much as 11% from the current price levels. The street-high of $72 implies potential upside of 44%.
Papa John’s finds itself at a crossroads. Takeover buzz has ignited excitement, but its financial challenges and fierce competition cannot be ignored. While a buyout could reshape its future, investors must weigh its recent struggles against its long-term potential before taking a seat at the table.
