Can I have your thoughts on Pizza Pizza Royalty going forward?
PZA is a $457.9M company that pays a 6.4% yield. Its performance has been quite resilient over the last few years, and it now trades at a 14.6X forward earnings multiple. PZA operates as a royalty company that collects stable royalty earnings from the franchisee and pays out almost all of its cash flow as distributions. Its balance sheet is decent, with net debt of $39.8M, strong profit margins, and recent sales growth of ~13%. Going forward its sales and earnings are expected to grow in the high-single digits this year, and then ~3% to 5% thereafter, along with inflation. Although growth is not that fast, it is stable, and predictable in earnings and distribution payments. Overall, we like this name for income purposes.