"High cheese prices" have been a fixture of earnings releases and annual reports for Hidden Gems watchlist stock Papa John's
Sigh. Yes, and the side you never look at (and now you see why it's best not to try).
Anyway, the other side to the high cost of cheese, paid for by pizza makers such as Papa John's, direct competitors Domino's
The report looked like a flashback to my story on Nucor
These results apparently took Wall Street by surprise, as evidenced by the meteoric leap that Lucille's stock price took on the earnings news (up more than 41% yesterday). But in its surprise, Wall Street apparently forgot why it had priced Lucille so cheaply in the first place. The company carries a considerable debt load and has an additional large chunk of debt masquerading as convertible preferred stock. More important, although Lucille was free cash flow-positive this quarter (recording a penny and a half of free cash flow per share), this is the first quarter since June of last year that it has been so. Moreover, the company has had negative free cash flow for two of the past three years. Day traders beware: This is an investment that could quickly turn sour.
Fool contributor Rich Smith owns no shares of any company mentioned in this article, although he has owned PZZA in the past.