In early October, I penned an article outlining my long thesis for Papa John's International (NASDAQ:PZZA). I cited management's commitment to its shareholders, its brand recognition, and its strong comparable sales growth as catalysts. Strong Q3 earnings (which I discuss in more detail below) and improving equity market conditions have helped drive Papa John's stock performance in the short term. My original price target for Papa John's was $53.36 (implying 32% upside). Papa John's stock traded above this level on Friday, prompting me to update any investors who may have followed my recommendation.
Q3 2014 Earnings
On November 4, Papa John's announced its Q3 2014 earnings. Papa John's reported diluted EPS of $0.39, a 22% increase from Q3 2013 diluted EPS of $0.32. Q3 comparable sales increased 7.4% and 5.5% for its North American and International markets respectively.
Management also increased its full-year 2014 guidance for both EPS and comparable sales, as seen in the table below.
As I mentioned earlier, I had an original price target of $53.36. On Friday, Papa John's hit my price target intraday (traded above $54 per share), and closed the holiday-shortened trading session at $52.78. With equity markets back at all-time highs, I believe that this is a fair place to take some risk off of the table and lock in some profits. Accordingly, I recommend that anyone who followed my advice back in October should "ring the register" on Papa John's. Papa John's investors have been rewarded with a hefty return over the past two months, and I believe the current levels make for an attractive exit point.
Thank you for reading, and best of luck trading!
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.