PZZA - Papa John's: Is The Growth Model Broken?
2024-05-26 09:15:42 ET
Summary
- Papa John's International is the world's third largest pizza delivery company, with close to 6,000 restaurants in its network.
- PZZA stock is currently trading at levels last seen in the early days of the COVID-pandemic, and deeply oversold on a technical basis.
- The main issue is Papa John's comparable sales, which have been flat for the past 2 years. In an era of high inflation, that implies franchisee profitability has declined.
- While management's focus on improving corporate profitability is welcome, until they address SSSG, the stock may continue to lag.
One of my favourite stock screens for new value ideas is to look for stocks making new 52-week lows. For the most part, stocks make new lows because their fundamentals justify their declines. However, fundamentals can also change, and if a turnaround is successful, investors who buy near the bottom can make handsome returns.
One recent name that has come up in my stock screens is Papa John's International ( PZZA ), as the company is currently trading at levels last seen in the early days of the COVID-19 pandemic (Figure 1)....
Papa John's: Is The Growth Model Broken?