Papa John's International, Inc. PZZA provided an update on its business for the fourth quarter and financial year 2024. The company stated that the results are preliminary and subject to the completion of normal year-end accounting procedures and adjustments. The company expects to release its fourth-quarter fiscal 2024 results on Feb. 27, 2025.

Preliminary Sales Update

In the fiscal fourth quarter ending Dec. 29, 2024, global system-wide sales totaled nearly $1.2 billion, reflecting an 8% decrease year over year. Excluding the 53rd week in 2023, sales were roughly flat.

In fiscal 2024, global system-wide sales amounted to about $4.9 billion, indicating a 3% decline from 2022 levels. Excluding the additional 53rd week, sales were down approximately 1%.

In North America, comparable sales for the fourth quarter of fiscal 2024 fell by 4% year over year. The downside can be attributed to a fall in both transactions and tickets. During the quarter, comparable sales at North America franchised restaurants and Domestic Company-owned restaurants were down 4% and 6% year over year, respectively. International comparable sales in the fiscal fourth quarter were up 2% year over year.

In fiscal 2024, North America comparable sales were down 4% year over year, courtesy of a 3% fall in transactions and a 1% fall in tickets. International comparable sales in fiscal 2024 were down approximately 1% year over year.

Store Developments

In fiscal 2024, total net unit openings came in at 124, including 81 net unit openings in North America and 43 net unit openings in international markets. Previously, the company anticipated opening 50-60 new restaurants in North America during the fiscal year.

During the year, Papa John's achieved a significant milestone by opening its 6,000th restaurant. The management expressed appreciation for franchise partners' enthusiasm for the brand's growth prospects. It reiterated plans to collaborate with both existing and new franchisees to advance its strategy of expanding in key high-growth markets globally.

Our Thoughts on PZZA Stock

Papa John's recent performance raises concerns about its growth trajectory, as reflected in its declining sales and weakening transaction volumes. Despite efforts under the Back to BETTER 2.0 strategy, the company has struggled to sustain momentum.

While PZZA trades at a forward P/E ratio of 15.64, significantly below the industry average of 24.41, this lower valuation may signal challenges rather than opportunities. Ongoing geopolitical tensions in the Middle East and declining transaction volumes continue to weigh on the company's prospects. Earnings estimates for fiscal 2025 have been revised downward in the past 30 days, reflecting growing skepticism among analysts.

Though the company achieved a milestone with its 6,000th restaurant and demonstrated progress in international markets, these positives are overshadowed by underwhelming North American performance and broader market headwinds. Investors are advised to approach PZZA with caution, as the stock’s near-term outlook appears uncertain.

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In the past three months, shares of Papa John's have declined 27% compared with the industry’s 6% fall.

PZZA’s Zacks Rank & Key Picks

Papa John’s currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Zacks Retail-Wholesale sector are:

Shake Shack Inc. SHAK presently carries a Zacks Rank #2 (Buy). SHAK has a trailing four-quarter earnings surprise of 18.3%, on average. The stock has gained 84.5% in the past year. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

The Zacks Consensus Estimate for SHAK’s 2025 sales and earnings per share (EPS) indicates a rise of 14.9% and 43.3%, respectively, from the year-ago period’s levels.

Chipotle Mexican Grill, Inc. CMG presently carries a Zacks Rank #2. CMG has a trailing four-quarter earnings surprise of 9.8%, on average. The stock has surged 26.5% in the past year.

The consensus estimate for CMG’s 2025 sales and EPS indicates growth of 12.9% and 18.1%, respectively, from the year-ago period’s levels.

Brinker International, Inc. EAT presently carries a Zacks Rank #2. EAT has a trailing four-quarter earnings surprise of 12.1%, on average. The stock has surged 265.9% in the past year.

The consensus estimate for EAT’s fiscal 2025 sales and EPS indicates growth of 9.3% and 44.2%, respectively, from the year-ago period’s levels.

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