Papa John's Q2 Earnings & Revenues Beat Estimates, Stock Down

PZZA’s Q2 Earnings & Revenue Discussion

The company reported second-quarter adjusted earnings per share (EPS) of 46 cents, beating the Zacks Consensus Estimate of 43 cents by 6.98%. It reported adjusted earnings of 41 cents per share in the prior-year quarter.

Quarterly revenues of $482.4 million surpassed the consensus mark by 0.02%. However, the top line declined 8.8% year over year. The downside was attributed to a $37 million decrease in Domestic Company-owned restaurant revenues, including approximately $25 million related to 85 restaurants (refranchised in the fourth quarter of 2025) and dismal comparable sales.

PZZA’s Q2 Global Restaurant Sales & Comps

Total global system-wide restaurant sales were $1.20 billion, down 4.8% year over year, excluding the impact of foreign currency. North America system-wide sales decreased 8% to $850.7 million, while International system-wide sales increased 5% to $347.2 million.

Total comparable sales declined 5.7% year over year compared with 1.6% growth in the prior-year quarter. Domestic Company-owned restaurant comps fell 8.9% compared with 0.3% growth a year ago, while North America franchised restaurant comps declined 8.2% compared with 1.0% growth. Overall North America comps decreased 8.3% versus 0.9% growth in the year-ago quarter. We projected North America comps to improve 0.2% year over year.

International comparable sales increased 1.5%, compared with 3.7% growth in the prior-year quarter. We projected the metric to increase 6.8% year over year.

PZZA’s Q2 Operating Highlights

Adjusted net income totaled $15.4 million compared with $13.5 million in the prior-year quarter. We projected the metric to be $13.4 million.

Adjusted EBITDA was $52.7 million compared with $52.6 million a year ago. We projected the metric to be $52.6 million.

Domestic Company-owned restaurants generated 4-wall EBITDA of $15.6 million, with the margin declining 130 basis points year over year to 11.2%. North America Commissary adjusted EBITDA margin improved about 140 basis points to 8.7%, aided by supply-chain savings and higher pricing, partly offset by lower volumes.

Papa John’s Balance Sheet

At the end of the second quarter, Papa John’s had approximately $500 million of total available liquidity. Its covenant leverage ratio was 3.3 times.

For the first six months of 2026, net cash provided by operating activities totaled $35.8 million compared with $66.8 million in the prior-year period. Free cash flow was $9.5 million compared with $36.5 million a year earlier.

PZZA’s Unit Developments

Papa John’s opened nine restaurants in North America during the second quarter and 41 in International markets, bringing total system-wide openings to 50. The company closed 92 restaurants during the quarter.

As of June 28, 2026, PZZA had 5,978 restaurants operating across 51 countries and territories. It ended the quarter with 3,439 North America restaurants and 2,539 International restaurants.

Papa John’s 2026 Guidance

For 2026, the company anticipates global system-wide restaurant sales to decline 2-4%, compared with the previous outlook of flat to down low single digits. North America comparable sales are expected to decline 6-8% compared with the earlier expectation of a 2-4% decrease.

International comparable sales are projected to increase 1-3%, down from the prior 2-4% growth forecast. Adjusted EBITDA is expected between $180 million and $190 million compared with the previous $200-$210 million range.

Papa John’s continues to expect 40-50 gross restaurant openings in North America and 180-220 International openings in 2026. Capital expenditures are projected between $70 million and $80 million, while adjusted depreciation and amortization are expected between $70 million and $75 million.

The company suspended its quarterly dividend beginning with the third quarter of 2026. Management plans to use the additional financial flexibility to accelerate investments in franchisee support, customer acquisition, technology, supply-chain optimization and its broader transformation strategy.

PZZA’s Zacks Rank

Papa John’s currently has a Zacks Rank #5 (Strong Sell).

Stocks to Consider

Here are some better-ranked stocks from the Zacks Retail-Wholesale sector:

BJ's Restaurants, Inc. BJRI currently sports a Zacks Rank #1 (Strong Buy). The company delivered a trailing four-quarter earnings surprise of 127.9%, on average. BJRI stock has risen 59.5% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for BJ's Restaurants’ 2026 sales and EPS indicates year-over-year growth of 4% each, respectively.

Five Below, Inc. FIVE presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 70.1%, on average. FIVE stock has gained 10.3% in the past six months.

The Zacks Consensus Estimate for Five Below’s 2027 sales and EPS indicates growth of 23.9% and 36.1%, respectively, from the year-ago period’s levels.

FIGS, Inc. FIGS has a Zacks Rank #2 at present. The company delivered a trailing four-quarter earnings surprise of 212.5%, on average. FIGS stock has gained 4.7% in the past six months.

The Zacks Consensus Estimate for FIGS’ 2026 sales and EPS indicates growth of 15.5% and 36.8%, respectively, from the prior-year levels.

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