Things went from bad to worse on Tuesday for Papa John's Int'l, Inc. (Nasdaq: PZZA ) shareholders when the company followed up its recent management controversy with a major second-quarter earnings miss. Even with PZZA stock down 37 percent in the past three months, analysts say things could get even worse for Papa John's before they get better.

Papa John's reported second-quarter adjusted earnings per share of 49 cents on revenue of $408 million. Both numbers were well short of consensus analyst estimates of 54 cents and $425.5 million, respectively. Revenue was down 6.2 percent from a year ago.

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North American same-store sales declined 6.1 percent, worse than the 4.9 percent decline Wall Street had anticipated.

Total international sales were up 12.2 percent, but international same-store sales declined 0.8 percent.

"While results have been challenged by recent events, we are committed to these strategic priorities and continue to believe that they will lead to enhanced performance," CEO Steve Ritchie says in a statement. "We have also begun an external audit of Papa John's culture and will address any improvements that are recommended at its conclusion."

Papa John's founder and former CEO John Schnatter resigned in July after he acknowledged using a racial slur during a conference call earlier this year. Schnatter, who remains on the board, is now suing the the company.

Unfortunately for PZZA stock investors, the Schnatter controversy and its potential fallout is not an excuse for the company's poor second-quarter performance. The second quarter ended on June 30, prior to Schnatter's departure.

Looking ahead, Papa John's lowered its full-year EPS guidance from a range of between $2.40 and $2.60 to a new range of between $1.30 and $1.80. In addition, the company now expects a full-year same-store sales growth decline of between 7 and 10 percent, well short of its previous guidance for no more than a 3 percent drop.

CFRA analyst Tuna Amobi says the Schnatter fallout will likely continue to weigh on PZZA stock.

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"While the company has subsequently removed Mr. Schnatter's image and likeness from its marketing materials, we are somewhat wary that the company's eponymous brand could remain inextricably linked with Mr. Schnatter, who has been its major marketing spokesman and notably remains on its board of directors," Amobi says.

CFRA has a "sell" rating and $40 price target for PZZA stock .

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