Papa John's International (Papa John's International) Predictability Rank

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What is Papa John's International Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Papa John's International Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

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Papa John's International (Papa John's International) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Restaurants » Papa John's International Inc (NAS:PZZA) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

PP1:Germany

Address

2002 Papa John's Boulevard, Louisville, KY, USA, 40299-2367

Website

https://www.papajohns.com

Papa John's is one of the largest players in the global QSR pizza market, boasting more than 5,700 restaurants across nearly 50 countries at the end of 2022. The firm operates a predominantly franchised system, owning just shy of 10% of its restaurants and generating revenue from franchise royalties, sales of pizza, and related products at its company-owned stores, and sales from its commissary supply chain. The firm is the third-largest limited-service pizza chain in the U.S. and fourth-largest globally, with a sizable presence in the U.K., China, South Korea, and Chile.

Executives

John W Garratt	director	100 MISSION RIDGE, GOODLETTSVILLE TN 37072
Stephen L Gibbs	director	C/O SCIENTIFIC GAMES CORPORATION, 1500 BLUEGRASS LAKES PARKWAY, ALPHARETTA, GA 30004
John C Miller	director
Ravi Thanawala	officer: Chief Financial Officer	788 CIRCLE 75 PARKWAY, ATLANTA GA 30339
Christopher K Collins	officer: VP, Treasury and Tax	788 CIRCLE 75 PARKWAY, ATLANTA GA 30339
Marvin Boakye	officer: Chief People Officer	PO BOX 99900, LOUISVILLE KY 40269
Olivia F Kirtley	director	6655 LANCER BLVD, SAN ANTONIO TX 78219
Robert Lynch	director, officer: President and CEO	P. O. BOX 99900, LOUISVILLE KY 40269
Jack H Swaysland	officer: SVP, COO - International	PO BOX 99900, LOUISVILLE KY 40269
Jeffrey C Smith	director	201 E LAS OLAS BOULEVARD, SUITE 1000, FORT LAUDERDALE FL 33301
James Norberg	officer: SVP, CROO	PO BOX 99900, LOUISVILLE KY 40269
Caroline Miller Oyler	officer: SVP, General Counsel	P.O. BOX 99900, LOUISVILLE KY 40269
Ann B Gugino	officer: Chief Financial Officer	1031 MENDOTA HEIGHTS ROAD, ST. PAUL MN 55120
Steven R Coke	officer: VP, IR and Strategy	P.O. BOX 99900, LOUISVILLE KY 40269
Amanda Clark	officer: Chief Development Officer	PO BOX 99900, LOUISVILLE KY 40269