Papa John’s International (PZZA)
Noted Papa John’s (PZZA) franchisee Peyton Manning might have embarrassed himself in the Super Bowl, but that did nothing to hurt this pizza slinger. PZZA stock is up 14% for the year-to-date and has roughly doubled in the past year.
Papa John’s enjoyed 9.6% earnings growth in the most recent quarter on a 6.4% gain in revenue, but PZZA stock looks to have gotten far ahead of bottom-line expansion. PZZA has a forward P/E that is now 66% more expensive than its own five-year average, as well as 41% more pricey than the S&P 500. PZZA stock is also expensive on a trailing earnings basis, trading at premiums of 76% and 26% to its five-year average and the broader market, respectively. The PEG is 26% higher than the five-year, while P/S is almost double its own long-term multiple.
Predictably, a significant 3.5% of the PZZA stock float is sold short, up from 3% just two weeks ago. As good as the gains have been, it might be time to lighten up on PZZA stock, and these other red-hot restaurant names, as well.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.