Papa John's: Todd Penegor Appointment Mitigates Key Uncertainty for Pizza Chain; Shares Still Cheap

Narrow-moat Papa John's announced that Todd Penegor, former CEO at no-moat Wendy's, will be its permanent replacement for former CEO Rob Lynch after the latter's departure for Shake Shack. The move comes after an extensive executive search process and places one of the most tenured restaurant executives on the market at the helm of the battered pizza company. This selection should placate weary investors, who have seen shares fall by 42% this year amid flagging store-level traffic, a slew of operational changes, and the departure of Lynch. Franchisees can take solace in Penegor's strong track record with Wendy's, at least in the firm's home US market, where he oversaw 12 consecutive years of comparable sales growth. We maintain our Standard Capital Allocation Rating for Papa John's and continue to see meaningful upside at current prices relative to our $69 fair value estimate.