Why Papa John's Shares Got Burned

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Papa John's (NASDAQ: PZZA  ) were looking stale today, falling as much as 12% after the pizza chain missed earnings estimates in its quarterly report and restated previous earnings.

So what: Papa John's said it made an adjusted profit of $0.62, below expectations $0.75 and down from a total of $0.65 a year ago. Revenue grew 20% to $367.3 million, topping expectations, as it benefited from an extra week in the calendar year. Comparable sales were up 5.2% in North America and 7% internationally.

Because of an accounting error related to a joint venture, Papa John's said it was forced to restate earnings going back to 2009, which resulted in the net loss of $0.15 per share in past earnings.

Now what: Though the company missed earnings estimates, $0.11 was taken out for the extra calendar week. I wouldn't be too concerned about the problem going forward, as revenue is still growing at a strong pace. The earning restatement is not particularly severe, and the issue seems to be under control now. Today's drop seems exaggerated; investors may want to take advantage of the pullback.

Find out what's next for Papa John's. Add the company to your Watchlist by clicking right here.  


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2283198, ~/Articles/ArticleHandler.aspx, 10/30/2014 10:58:33 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement