If you thought third-quarter revenue growth for Papa John's
When you consider that local competition, as well as giants Domino's
For the year, the company is expecting to open an additional 80 to 100 units domestically. Don't get too excited -- it also anticipates 80 to 100 units to be closed down. On the positive side, Papa John's does expect its operating margins to improve despite commodity costs, which will likely remain high.
As for its earnings, earnings per share (EPS) guidance of $2.17 to $2.21 for 2004 was reaffirmed. Again, contain your enthusiasm, since this is simply a confirmation of its previously lowered guidance. For 2005, Papa John's expects an EPS of $2.27 to $2.35, or 6% above its 2004 target.
Since we can't get a charge out of flat revenues and minuscule earnings growth, is there anything left to energize investor enthusiasm? The company did announce a one-year extension of its stock repurchase plan, but unfortunately only $7.1 million remains to buy shares with ($417.9 million of the allocated $425 million has already been used).
With very little to be thrilled about in the press release, perhaps some comfort can be found in the value of the company's stock. With its shares now priced in the $33 range, the company carries an enterprise value (EV) of $636 million. Papa John's has a run rate of structural free cash flow (SFCF) at $27.2 million, giving it an expensive EV-to-SFCF ratio of 23.
A purchase at this level is tomato pie-in-the-sky hopefulness, given the company's weak growth estimates and rich valuation. The cost of a commission to open an investment in Papa John's may be better spent buying your favorite pizza and enjoying it with family and friends.
Fool contributor Jeremy MacNealy does not own shares in any of the companies mentioned.