Papa John’s: Bullish As The New CEO Takes Charge

MIAMI, FL - JULY 11: In this photo illustration, a Papa John's pizza box is seen on July 11, 2018 in Miami, Florida. The founder of Papa John's pizza, John Schnatter, apologized Wednesday for using the N-word on a conference call in May. (Photo illustration by Joe Raedle/Getty Images)

Papa John’s International, Inc. (PZZA) dropped more than a quarter in 2018, after a period of negative publicity hurt its same-store sales and margins. Following its investment in 2018 February, the hedge fund, Starboard Value has brought about a series of noteworthy changes, the latest of which is the appointment of the new CEO. The industry veteran joins from Arby’s where his unconventional marketing strategies helped the fast-food chain outperform even the established players in the market.

Similarly, Chipotle Mexican Grill, Inc. (CMG) in 2018 February witnessed a well-respected leader joining the firm after a period of adverse publicity. Food safety issues in some of its outlets had slowed its same-store sales growth. As the new CEO gradually restored the sales recovery, the forward PE of Chipotle expanded close to 57.0% within six months. Due to the close resemblance of the two scenarios, I expect Papa John’s forward PE will also follow a similar expansion in six months. The application of the multiple thus calculated to the mid-point of adjusted EPS guidance results in a fair value of $59.25 with an upside of c. 23.1%, a compelling buying opportunity. However, my valuation assumes a stable economy and bullish market outlook as in 2018.

Read the Full Article on Seeking Alpha at:

https://seekingalpha.com/article/4291223-del-taco-slow-growing-debt-heavy-firm-needs-catalysts-upside

Disclosure: I/We have no investments in the stocks mentioned in the above article and don’t intend to open any within the next 72 hours. I wrote this article for myself, and it expresses my opinion. I/We receive no compensation, nor do I/We have any business relationship with any companies whose stocks are mentioned in the article.

SUBSCRIBE TO OUR MAILING LIST
For Latest Articles, Financial Models and Research Reports
We hate spam. Your email address will not be sold or shared with anyone else.

Be the first to comment

Leave a Reply

Your email address will not be published.


*