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Here's Why I Am Remaining Neutral On Papa John's

Nearly 13 months ago, I wrote my first Seeking Alpha article about pizza chain Papa John's (NASDAQ:PZZA). In that article, I highlighted how the company expanded its revenue and net income in the previous five years. However, its free cash flow suffered during that time due to heavy investments in expansion.

I also noted in that first article, Papa John's long-term debt clocked in at 193% of stockholder's equity and vastly exceeding my personal threshold of 50%. I concluded the first article with a neutral tone due to its expansion plans. Since I published that article, Papa John's gave its shareholders a total return of 74% vs. 1% for the S&P 500 as a whole. Let's take a look to see what is going on with the company.

Growth in revenue, profitability and cash flow

Business-oriented investors want to see their enterprises expand revenue and generate cash. Papa John's ended its FY 2014 with a growth rate in its revenue, net income and free cash flow of 11%, 5% and 46%, respectively, year over year. Papa John's ended FY 2014 with 4,663 locations vs. 4,428 at the end of FY 2013, partially contributing to fundamental expansion. More importantly, Papa John's...