Recently, we celebrated my son's second birthday with a trip to Chuck E. Cheese
The experience also reminded me of something else: Sometimes you have to venture beyond your doorstep to get a great pizza.
It's hard to deny the appeal of Papa John's
However, the company closed out fiscal 2004 on a high note relative to the rest of the year. The thin 0.7% rise in fourth-quarter comps looks deep-dish-like compared to the full-year's scant 0.1% system-wide increase. Papa John's franchise outlets (which represent about four-fifths of the total) registered flat growth for the year.
Meanwhile, the company did manage to squeeze higher earnings out of the modest uptick in revenues. Fourth-quarter net income jumped nearly 15% to $9.4 million from $8.2 million a year ago. Without a one-time consolidation charge and lease adjustment, the earnings picture looks even more appetizing; earnings per share jumped to $0.73, topping estimates by a nickel.
Pizza delivery chains have had a tough time breaking away from the pack. They've tried to differentiate themselves by rolling out a series of innovative new products. Yum! Brands'
This promotion seems to be a vast improvement over a previous one that promised free DVDs. I was lured by this offer once, only to find a grand total of two movie options to choose from, one of which was the virtually unwatchable Weekend at Bernie's II (I know because I actually watched it). Maybe the selection would have been better had incoming CEO Nigel Travis -- the former Blockbuster chief -- taken the reins a little sooner.
The effectiveness of this new campaign remains to be seen, but Papa John's did manage to report a respectable 2.1% increase (11.5% internationally) in February same-store sales. If the company can show some follow-through on those gains, then it will definitely make the stock appear more palatable.
Papa John's is a Motley Fool Hidden Gems watch list stock, and Chuck E. Cheese (CEC Entertainment) is a recommendation of Hidden Gems, the Foolish newsletter devoted to finding the best small-cap ideas around. Curious? Take afree trialtoday to learn more.
Fool contributor Nathan Slaughter thinks Papa John's garlic butter dipping sauce is worth the price of the pizza. He owns none of the companies mentioned.