Papa John’s Sees Surge in Options Trading Amid Earnings Report

On November 6, 2023, Papa John’s International, Inc. (NASDAQ:PZZA) experienced a notable spike in options trading, with investors purchasing 22,742 call options. This figure marks a remarkable increase of 488% compared to the average volume of 3,868 call options. The heightened activity came on a day when Papa John’s shares opened at $41.08, reflecting a decline of 4.1% from the previous trading session.

The company’s stock performance has been under scrutiny, particularly with its recent earnings report. Papa John’s has a fifty-day moving average price of $48.22 and a two-hundred-day moving average price of $45.53. Over the past year, the stock has reached a low of $30.16 and a high of $56.23. Currently, the company has a market capitalization of $1.35 billion, a price-to-earnings (P/E) ratio of 18.18, and a price-to-earnings-growth (PEG) ratio of 4.46.

In its latest earnings announcement, Papa John’s reported earnings per share (EPS) of $0.32 for the quarter, falling short of the consensus estimate of $0.40 by $0.08. The company recorded a net margin of 3.58% and a negative return on equity of 14.42%. Revenue for the quarter totaled $508.15 million, which also missed analyst expectations of $523.67 million. In the same period last year, the company had earnings of $0.43 per share, indicating a slight year-over-year revenue increase of 0.3%.

Dividend Declaration and Analyst Ratings

In addition to its earnings report, Papa John’s announced a quarterly dividend of $0.46 per share, scheduled for payment on November 28, 2023. Shareholders of record on November 17, 2023, will receive this dividend, translating to an annualized dividend of $1.84 and a yield of 4.5%. The company’s dividend payout ratio (DPR) stands at 81.42%.

Recent analyst ratings have varied significantly. On October 20, Zacks Research downgraded Papa John’s from a “hold” to a “strong sell” rating. Conversely, Stifel Nicolaus raised their target price from $38.00 to $42.00, maintaining a “hold” rating. Benchmark also reaffirmed a “buy” rating, increasing its price target to $60.00 from a previous $50.00. Meanwhile, Stephens lowered its target to $49.00 but kept an “overweight” rating. A total of four analysts recommend a buy, nine suggest holding, and one rates it as a sell, resulting in a consensus rating of “hold” with an average price target of $50.50.

Institutional Investment Movements

Institutional investors have recently adjusted their holdings in Papa John’s, reflecting shifting confidence in the company. Bank of America Corp DE increased its stake by 10.5% in the second quarter, now holding 1,700,062 shares valued at approximately $83.2 million after acquiring an additional 161,906 shares. Deprince Race & Zollo Inc. raised its position by 0.7% in the third quarter, owning 1,615,184 shares worth about $77.8 million.

Other significant movements include Segall Bryant & Hamill LLC, which increased its holdings by 18.9% in the second quarter, and Geode Capital Management LLC, which grew its stake by 0.6% during the same period. Brandes Investment Partners LP made a significant move, increasing its position by 271.6% and now holds 690,299 shares valued at $33.8 million.

Overall, the fluctuations in Papa John’s stock and the accompanying options trading activity highlight investors’ varied confidence in the company’s future performance following its recent earnings report. As analysts and institutional investors continue to assess the company’s potential, Papa John’s remains a focal point in the pizza delivery and carryout market.