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Hello all,

Sorry about the original post, I think this one is 
formatted a little better.

I have been monitoring this board for the last month 
or so and, unlike alot of the msg. boards on Yahoo!, 
a large majority of the posts are relevant, 
informative, and helpful.  I am a big fan of Fooldom 
and enjoy reading the posts and news articles on a 
daily basis.  

I would like to submit Papa John's (PZZA) as a possible
RuleMaker company.  Listed below is the RuleMaker 
qualifications.  They don't yet have great net margins 
or true monopoly status but their other financials and 
business prospects are pretty good.

Reporting periods for PZZA and YUM (Tricon Glbl, parent 
of Pizza Hut, Taco Bell, & KFC) is for the year ended 
12/31/98.  It appears that PZZA is a solid 2nd tier 
company, although I'm not sure the pizza business is a 
RuleMaker business.  I have done the reports for 
1998,1997, & 1996.  The 1998 report is listed below.

Brand                   Financial Direction
Familiarity   1         Sales Growth        3
Openness      1         Gross Margins       1
Optimism      1         Net Margins         2
Legitimacy    1         Shares Outstanding  2
Inevitability 1         Cash-to-Debt        3
Solitariness  1         Fool Flow Ratio     3
Humor         1         Expansion Potential 3

Sub-total     7         Sub-total           17


Financial Location      Monopoly Status
Mass Market Habit  2    Gross Margins       4
Gross Margins      1    Net Margins         0
Net Margins        0    Net Cash            4
Cash-to-Debt       2    Fool Flow Ratio     0
Fool Flow Ratio    2    Convenience         2
Your interest      2

Sub-total          9    Sub-total           10

My enjoyment:  1

Total Score: 44
(just as a note for years ended 1997 & 1996 total 
scores were 48 & 46 respectively, are we seeing a 
decline???)


Recent Financials (in thousands)

              Year Ended 12/31/98   Year Ended 12/31/97
Income Statement
Sales           669,806               508,784
Cost of Sales   328,200               243,680
Net Income      35,165                26,853
#Shares         30,327                29,592

Balance Sheet
Cash & Equiv    33,984                18,692
Current Assets  67,834                49,176
Short-term Debt 0                     0
Current Liab.   43,626                30,382
Long-term Debt  0                     0

Margins & Ratios
Gross Margins   51.0%                 52.1%
Net Margins     5.3%                  5.3%
Cash-to-Debt    No debt               No debt
Net Cash        33,984                18,692
Fool Flow Ratio 0.78                  1.00


Here are the financials for YUM for same period

Income Statement
Sales              8,468,000
Cost of Sales      4,764,000
Net Income         445,000
Shares Outstanding 156,000

Balance Sheet
Cash & Equiv       208,000
Current Assets     625,000
Short-term Debt    96,000
Current Liab.      1,473,000
Long-term Debt     3,436,000

Margins & Ratios:
Gross Margins      43.7%
Net Marings        5.3%
Cash-to-Debt       0.06
Net Cash           -3,332,400
Fool Flow Ratio    .30

I would appreciate it if someone could verify the 
financials.  It seems that YUM has an incredibly low 
Flow Ratio.  Also, are there any other public 
competitors of PZZA and YUM?


I would appreciate any comments, criticisms, or 
corrections.

locke


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I would appreciate any comments, criticisms, or
corrections.<<<


Comments only:

No matter what the overall score, I'd like to see net margins above 7% preferably in double digits before crowning a cash king. Usually one would like to see sales over $1 billion as well (sometimes this rule gets a little bent around here)

That said I've been subjectively impressed with Papa Johns in my local area. I hadn't heard of them until 6 months ago. Ordered their pizza recently. It tastes better than dominos or the hut but not by much and certainly is lacking when compared to some of our local upscale pizza places. What impressed me most was the sight of three Papa john delivery cars within ten minutes last night while I was driving home. My immediate impression is that they must be in a growth phase.

I think they would be riskier than the average rulemaker. Lots of competition, low margins...could be a merchant king. If however they are growing rapidly the risk may be worth the reward.

-MarkV

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I would like to submit Papa John's (PZZA) as a possible
RuleMaker company. Listed below is the RuleMaker
qualifications. They don't yet have great net margins
or true monopoly status but their other financials and
business prospects are pretty good.


I think we should wait a while before considering PZZA as a RuleMaker.

1. As noted sales are not $1 billion yet. This hasn't always stopped us, but recent experience suggests that it may be a few years before sales get to this level.

2. The one competitor that has been identified (YUM) is 10 times the size of PZZA, and it has two divisions that are in at least somewhat different areas of business (i.e., chicken and Mexican food with no delivery). This makes direct comparisons of some question.

3. If possible, I'd like to see comparisons to other pure Pizza franchises, such as Numero Uno.

4. Moreover, the RM scores have been dropping each year as the business has been growing. This makes me even more anxious to wait until I see $1 billion in sales before doing any more work to decide where PZZA is really a RuleMaker.

Al
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I agree w/both assesments. I apologize as I failed to mention that PZZA sales are not up to the $1B mark yet. Net margins are also a problem. I also had trouble identifying public companies who are direct competitors of PZZA. I live in Charlotte, NC and the 4 big competitors here are Papa Johns, Pizza Hut (parent company YUM), Little Casesars, and Dominos (both privately held so far as I know).

Also of note is the fact that over the last year their receivables/sales ratio doubled from 2.5% to over 5%.

I thank you for your comments and views. I will continue to monitor PZZA and will post once they hit the $1B sales mark, if they have not fallen further.

locke
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