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1. Company Snapshot

1.a. Company Description

Pizza Pizza Royalty Corp., through its subsidiary, Pizza Pizza Royalty Limited Partnership, owns and franchises quick service restaurants under the Pizza Pizza and Pizza 73 brands in Canada.It also distributes food.As of December 31, 2021, the company had 727 restaurants in the royalty pool.


Pizza Pizza Royalty Corp.was founded in 1967 and is headquartered in Toronto, Canada.

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1.b. Last Insights on PZA

The recent performance of Pizza Pizza Royalty Corp. was driven by a consistent dividend payout strategy, with the announcement of a $0.0775 per share monthly cash dividend for July 2025, mirroring the May 2025 dividend. This demonstrates the company's commitment to returning value to shareholders. Additionally, the election of directors at the Annual General Meeting held on June 13, 2025, suggests a stable and well-governed corporate structure.

1.c. Company Highlights

2. Pizza Pizza Royalty Corp's Q3 2025 Earnings: A Mixed Bag

Pizza Pizza Royalty Corp's financial performance for Q3 2025 was marked by a 2% increase in Royalty Pool System Sales to $158.8 million, resulting in royalty income of $10.2 million. The company's EPS came in at $0.236, slightly below estimates of $0.24. The dividend declared was $0.2325 per share, consistent with the prior year. The company's revenue growth was modest, and the EPS miss was minor. With a P/E Ratio of 16.09 and a Dividend Yield of 6.18%, the stock appears to be fairly valued, with investors pricing in a stable dividend stream.

Publication Date: Nov -30

📋 Highlights
  • Same-Store Sales Growth:: Pizza Pizza achieved 0.3% growth, while Pizza 73 declined 1.1%, with a 0.1% compound average growth rate due to poor weather and Canada Post strikes.
  • Store Expansion:: Opened 14 new locations (4 traditional Pizza Pizza, 10 non-traditional Pizza Pizza, 2 traditional Pizza 73) to reach 811 total locations, including first 4 in Mexico for international growth.
  • Royalty Performance:: Royalty Pool System Sales rose 2% to $158.8M, with $10.2M in royalty income, and $0.2325/share dividend ($5.7M total), matching prior-year payouts.
  • Consumer Behavior Shifts:: Reduced visit frequency but higher average check via delivery growth, aided by customer tracking and faster delivery speeds, alongside increased pickup orders.
  • Q4 Sports Partnerships:: Leveraging Blue Jays' run, NHL collaborations, and Vladimir Guerrero Jr.-branded XL pizza, with 10M Canadians watching Game 7 to drive Q4 sales momentum.

Operational Highlights

The company's brand reported a compound same-store sales growth of 0.1%, with Pizza Pizza restaurants at 0.3% growth and Pizza 73 restaurants at a decline of 1.1%. The growth in Pizza Pizza's organic delivery channel helped increase the average check. Despite heightened competition and reduced consumer spending, the company stayed proactive and focused on fundamentals, value messaging, partnerships, promotions, and investing in digital and loyalty to drive customer frequency and retention. As COO Philip Goudreau noted, the company is focused on engaging customers on their organic platform to increase profitability.

Store Expansion and International Growth

The company ended Q3 with 811 locations in Canada and opened 16 new locations during the quarter. The company has also made a start in international expansion, with 4 locations in Mexico, marking their first step into a market larger than the US pizza market. Although progress is slower than desired, the partners and management team are committed to this goal. Additional locations are planned for the end of the year, which will benefit investors.

Outlook and Valuation

The company sees Q4 as a big sports quarter, with October baseball and partnerships with NHL teams across the country. Analysts estimate next year's revenue growth at 2.4%. With a P/S Ratio of 9.18 and an EV/EBITDA of 10.48, the stock appears to be reasonably valued. The dividend yield of 6.18% and a Free Cash Flow Yield of 8.72% provide a floor for the stock, making it an attractive option for income investors.

3. NewsRoom

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Nov -07

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Pizza Pizza (TSX:PZA) Margins Slip Below Expectations, Dividend Sustainability Becomes Key Focus

Nov -06

Source:

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Top 3 TSX Dividend Stocks To Consider

Nov -05

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3 TSX Dividend Stocks Yielding Up To 14.1%

Oct -29

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PIZZA PIZZA ROYALTY CORP. ANNOUNCES OCTOBER DIVIDEND AND TIMING OF THIRD QUARTER 2025 RESULTS

Oct -16

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.50%)

6. Segments

Pizza Restaurant

Expected Growth: 4.5%

Growing demand for convenience food, increasing popularity of online ordering and delivery, and Pizza Pizza's focus on quality and customer satisfaction are expected to drive growth in the Canadian pizza market.

7. Detailed Products

Pizza

Freshly baked pizzas made with a variety of toppings and crust options

Wings

Crispy and flavorful chicken wings tossed in a range of sauces

Sides

Crunchy salads, savory breadsticks, and other tasty accompaniments

Desserts

Sweet treats like chocolate-dipped cookies and cinnamon sugar donuts

Combo Meals

Bundle deals that include a pizza, wings, and a side

Catering

Customizable catering options for events and gatherings

8. Pizza Pizza Royalty Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Pizza Pizza Royalty Corp. faces moderate threat from substitutes, as customers have various alternatives for pizza, such as cooking at home or opting for other fast-food chains.

Bargaining Power Of Customers

Customers have limited bargaining power due to the fragmented nature of the market, and Pizza Pizza Royalty Corp.'s strong brand recognition.

Bargaining Power Of Suppliers

Suppliers of ingredients and materials have moderate bargaining power, as Pizza Pizza Royalty Corp. relies on a few key suppliers, but has some flexibility to negotiate prices.

Threat Of New Entrants

The threat of new entrants is high, as the pizza industry is attractive and has relatively low barriers to entry, making it easier for new competitors to emerge.

Intensity Of Rivalry

The intensity of rivalry is high, as Pizza Pizza Royalty Corp. operates in a highly competitive market with many established players, leading to aggressive marketing and pricing strategies.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 13.78%
Debt Cost 3.95%
Equity Weight 86.22%
Equity Cost 8.66%
WACC 8.01%
Leverage 15.98%

11. Quality Control: Pizza Pizza Royalty Corp. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Pizza Pizza

A-Score: 7.2/10

Value: 4.5

Growth: 4.0

Quality: 8.9

Yield: 9.0

Momentum: 7.0

Volatility: 10.0

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Nathan's Famous

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Value: 4.9

Growth: 6.6

Quality: 7.0

Yield: 4.0

Momentum: 9.0

Volatility: 7.0

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Dine Brands

A-Score: 5.6/10

Value: 8.8

Growth: 3.3

Quality: 5.1

Yield: 9.0

Momentum: 3.0

Volatility: 4.3

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MTY Food Group

A-Score: 5.5/10

Value: 7.1

Growth: 6.1

Quality: 4.2

Yield: 5.0

Momentum: 3.0

Volatility: 7.3

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Papa John's

A-Score: 4.9/10

Value: 5.7

Growth: 4.6

Quality: 4.5

Yield: 6.0

Momentum: 4.5

Volatility: 4.0

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El Pollo Loco

A-Score: 4.3/10

Value: 7.0

Growth: 4.7

Quality: 4.0

Yield: 3.0

Momentum: 1.0

Volatility: 6.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

15.33$

Current Price

15.33$

Potential

-0.00%

Expected Cash-Flows