By Charley Blaine
Investing.com – In appearance, nothing prevents Papa John's International (NASDAQ :), the third largest pizza delivery company, to see its stock rise.
Shares however rose 4% Wednesday afternoon, a day after recording a 20% drop in their fourth-quarter sales and 15 cents per share, down from 65 cents in the fourth quarter. 39, last year. The performance of the action was better than that of rivals Domino's Pizza (NYSE 🙂 and Yum! Brands (NYSE :), owner of Pizza Hut.
The reason for this gain seems to be the direction. The company expects that 2019 will not be so bad, with comparable sales in North America down 1% to 5% from 2018 and comparable sales internationally, up 3%, better than some analysts hoped.
Adjusted earnings for the year will range from $ 1 to $ 1.20, according to the company's forecast. Adjusted earnings in 2018 was $ 1.34, according to the report on the company's results.
In the fourth quarter, current income was 15 cents, against 19 cents forecast by analysts polled by Investing.com, against 65 cents a year ago. Revenue of approximately $ 374 million also missed Investing.com's estimate of $ 393 million.
Nevertheless, the question is whether the stock can continue to grow steadily.
It was parked in the lower $ 40 this year and has not yet exceeded one-third of its 64-week high (64 weeks). What will make 2019 better (especially in the second half of the year) will be strong promotional efforts throughout the year, focusing on quality ingredients, stronger internal systems and better relationships with franchisees, who have had to face fierce competition from other pizzas, CEO Steve Ritchie said during a conference call.
Ritchie took over from founder John Schattner as CEO last summer.
As importantly, he negotiated a $ 200 investment in February from Starboard Value LP, the activist investor, with an additional $ 50 million option. Jeff Smith, of Starboard, is now Chairman of the Board and, at least for the moment, the Executive Suite is stable.
Papa John's had a hard time coping with the aftermath of 2018 after Schattner resigned after using a racial insult during a conference call. The spinoffs compromised sales and the company looked for a buyer. He gave up his efforts when he judged the bids too low and, in February, found Starboard willing to invest.
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