Papa John’s Pizza (PZZA) vs. Chuy’s (NASDAQ:CHUY) Financial Analysis

Papa John’s Pizza (NASDAQ: PZZA) and Chuy’s (NASDAQ:CHUY) are both small-cap retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, dividends, institutional ownership, risk, earnings, profitability and analyst recommendations.

Dividends

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Papa John’s Pizza pays an annual dividend of $0.90 per share and has a dividend yield of 1.5%. Chuy’s does not pay a dividend. Papa John’s Pizza pays out 34.4% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares Papa John’s Pizza and Chuy’s’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Papa John’s Pizza $1.78 billion 1.11 $102.29 million $2.62 22.50
Chuy’s $369.59 million 1.19 $28.95 million $0.96 27.03

Papa John’s Pizza has higher revenue and earnings than Chuy’s. Papa John’s Pizza is trading at a lower price-to-earnings ratio than Chuy’s, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

87.0% of Papa John’s Pizza shares are held by institutional investors. Comparatively, 95.6% of Chuy’s shares are held by institutional investors. 27.7% of Papa John’s Pizza shares are held by insiders. Comparatively, 3.3% of Chuy’s shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Papa John’s Pizza and Chuy’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Papa John’s Pizza 5.79% -366.49% 18.16%
Chuy’s 7.83% 9.40% 6.28%

Analyst Recommendations

This is a breakdown of current recommendations for Papa John’s Pizza and Chuy’s, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Papa John’s Pizza 0 7 3 0 2.30
Chuy’s 0 7 2 0 2.22

Papa John’s Pizza currently has a consensus price target of $76.00, suggesting a potential upside of 28.90%. Chuy’s has a consensus price target of $26.89, suggesting a potential upside of 3.62%. Given Papa John’s Pizza’s stronger consensus rating and higher probable upside, analysts plainly believe Papa John’s Pizza is more favorable than Chuy’s.

Risk and Volatility

Papa John’s Pizza has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500. Comparatively, Chuy’s has a beta of -0.32, indicating that its share price is 132% less volatile than the S&P 500.

Summary

Papa John’s Pizza beats Chuy’s on 10 of the 16 factors compared between the two stocks.

Papa John’s Pizza Company Profile

Papa John's International, Inc. operates and franchises pizza delivery and carryout restaurants under the Papa John's trademark in the United States and internationally. It operates through five segments: Domestic Company-Owned Restaurants, North America Commissaries, North America Franchising, International Operations, and All Others. The company also operates dine-in and delivery restaurants. As of December 31, 2017, it operated 5,199 Papa John's restaurants, which included 743 company-owned and 4,456 franchised restaurants. The company was founded in 1984 and is headquartered in Louisville, Kentucky.

Chuy’s Company Profile

Chuy's Holdings, Inc., through its subsidiaries, owns and operates restaurants under the Chuy's name in Texas and 19 states in the Southeastern and Midwestern United States. As of December 31, 2017, the company operated 91 Chuy's restaurants in 19 states. Chuy's Holdings, Inc. was founded in 1982 and is headquartered in Austin, Texas.

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