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Despite posting healthy earnings, Papa John's International, Inc.'s (NASDAQ:PZZA ) stock has been quite weak. Our analysis suggests that there are some reasons for hope that investors should be aware of.
View our latest analysis for Papa John's International
The Impact Of Unusual Items On Profit
Importantly, our data indicates that Papa John's International's profit was reduced by US$27m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Papa John's International to produce a higher profit next year, all else being equal.
That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.
Our Take On Papa John's International's Profit Performance
Because unusual items detracted from Papa John's International's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Papa John's International's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 22% over the last twelve months. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example, Papa John's International has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.
Today we've zoomed in on a single data point to better understand the nature of Papa John's International's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.