PZZA, in association with franchise partner PJP Investments Group, recently announced expansion plans in India. The company remains optimistic on the attractiveness of the Indian market owing to attributes including the country’s significant size, burgeoning income and rising aspirations of its middle class.
PJP Investments Group is one of Papa John’s longest-tenured international franchisee partners and operates more than 100 Papa John’s restaurants across the United Arab Emirates, Saudi Arabia and Jordan.
Through the expanded partnership, the company plans to open new restaurants in Bangalore (in 2024) and expand outlets in other cities (in South India) and regions of the country. It plans to open 650 restaurants in India by 2033.
In this regard. Amanda Clark, Papa John’s chief international and development officer, said, “Papa Johns global momentum continues, in partnership with seasoned, successful restaurant operators like PJP Investments. We are excited that their commitment to flawless execution of Papa Johns high standards is now being brought to India.”
Focus on International Expansion & Franchising
Increased focus on identifying new markets (to enter) and attracting new capitalized franchisees (for partnership) bode well. During the third quarter of fiscal 2022, the company signed a deal with a global franchisee — Levant — to add two new countries (with tentative store openings in fiscal 2023). The company intends to open more than 100 restaurants through the partnership. The company has also announced a partnership with FountainVest Partners to open more than 1,750 new stores across China by 2040.
During the fiscal fourth quarter, the company marked its entry into a new market in Honduras. With six store openings in the region, the company is optimistic in this regard and anticipates opening more than 25 stores (in the market) over the next three years. The company anticipates its 2023 global development outlook to be between 270 and 310 net new restaurants. It expects its worldwide net unit (from fiscal 2023 through 2025) to grow between 1,400 and 1,800 net new units.
The company plans to increase its international units, a large portion of which will be franchised. We believe that re-franchising a large chunk of its system reduces a company’s capital requirements and spurts earnings per share growth and ROE expansion. Free cash flow continues to grow, which enables reinvestment for increasing brand recognition and shareholder return.
In the past six months, shares of Papa John’s have gained 4.5% compared with the industry’s 17.8% growth.
Zacks Rank & Key Picks
Papa John’s currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Zacks Retail-Wholesale sector are Chuy’s Holdings, Inc. CHUY, Arcos Dorados Holdings Inc. ARCO and Bloomin’ Brands, Inc. BLMN.
Chuy’s Holdings currently sports a Zacks Rank #1 (Strong Buy). CHUY has a trailing four-quarter earnings surprise of 19.1%, on average. Shares of CHUY have increased 47.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Chuy’s Holdings 2023 sales and EPS suggests growth of 10.8% and 19%, respectively, from the corresponding year-ago period’s levels.
Arcos Dorados currently sports a Zacks Rank #1. ARCO has a long-term earnings growth of 7.8%. Shares of the company have declined 8.3% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2024 sales and EPS suggests growth of 8% and 11.4%, respectively, from the year-ago period’s levels.
Bloomin’ Brands currently sports a Zacks Rank #1. BLMN has a long-term earnings growth rate of 12.3%. The stock has gained 23% in the past year.
The Zacks Consensus Estimate for Bloomin’ Brands 2024 sales and EPS suggests growth of 2.4% and 5.5%, respectively, from the year-ago period’s reported levels.
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