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Domino's Pizza (DPZ) Poised for Growth Despite Challenges
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On Dec 5, we issued an updated research report on popular pizza delivery company Domino's Pizza, Inc. (DPZ - Free Report) .
Though the U.S. restaurant industry is going through its worst year since the end of the recession, Domino’s Pizza is apparently immune to the present conditions.
The company’s revenues surpassed the Zacks Consensus Estimate in seven out of the last eight quarters. Moreover, the third quarter of 2016 marked the 22nd and 91st consecutive quarter of positive same-store sales domestically and internationally, respectively. Going forward, its digital ordering system, focus on re-imaging and other sales initiatives are expected to help sustain the growth momentum.
In fact, we note that Domino’s Pizza’s shares have outperformed the broader Zacks categorized Retail-Food & Restaurant Market year to date. While the stock surged over 51%, the broader market witnessed a dip of 0.2% during the same time period.
Also, upward estimate revisions reflect optimism regarding the stock’s prospects. The Zacks Consensus Estimate for 2016 and 2017 earnings moved north by 2.9% and 4.5%, respectively, over the last 60 days.
Domino’s Pizza’s operational advantages, given its market share and scale, along with insistent focus on innovation and execution of growth strategy, should aid the stock in maintaining its solid performance.
Moreover, the company is working toward reducing its ownership of restaurants and is focusing more on re-franchising as it minimizes capital requirements, and facilitates earnings per share growth and ROE expansion.
Additionally, the company’s commitment to expand presence in the high-growth international markets bode well. Notably, many of its international franchisees continue to generate robust returns.
However, though the U.S. dollar weakened slightly in 2016 compared to the previous year, the negative currency impact is a concern for Domino’s Pizza as it has sizeable international operations.
Moreover, Domino’s Pizza has undertaken a number of sales-building efforts which offer long-term advantages. However, costs involved are expected to continue hurting margins in the near term. Also, performance-based incentives, compensation and labor costs are resulting in higher expenses and may put margins under increased pressure.
The Zacks Consensus Estimate for Papa John’s 2016 earnings moved up 2.4% over the last 60 days. Meanwhile, for the full year, EPS is expected to improve 19.9%.
The Zacks Consensus Estimate for McDonald's 2016 earnings climbed 2.3% over the last 60 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 6.16%.
Wendy’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 28.38%. Further, for 2016, EPS is expected to grow 23.6%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>
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Domino's Pizza (DPZ) Poised for Growth Despite Challenges
On Dec 5, we issued an updated research report on popular pizza delivery company Domino's Pizza, Inc. (DPZ - Free Report) .
Though the U.S. restaurant industry is going through its worst year since the end of the recession, Domino’s Pizza is apparently immune to the present conditions.
The company’s revenues surpassed the Zacks Consensus Estimate in seven out of the last eight quarters. Moreover, the third quarter of 2016 marked the 22nd and 91st consecutive quarter of positive same-store sales domestically and internationally, respectively. Going forward, its digital ordering system, focus on re-imaging and other sales initiatives are expected to help sustain the growth momentum.
In fact, we note that Domino’s Pizza’s shares have outperformed the broader Zacks categorized Retail-Food & Restaurant Market year to date. While the stock surged over 51%, the broader market witnessed a dip of 0.2% during the same time period.
Also, upward estimate revisions reflect optimism regarding the stock’s prospects. The Zacks Consensus Estimate for 2016 and 2017 earnings moved north by 2.9% and 4.5%, respectively, over the last 60 days.
Domino’s Pizza’s operational advantages, given its market share and scale, along with insistent focus on innovation and execution of growth strategy, should aid the stock in maintaining its solid performance.
Moreover, the company is working toward reducing its ownership of restaurants and is focusing more on re-franchising as it minimizes capital requirements, and facilitates earnings per share growth and ROE expansion.
Additionally, the company’s commitment to expand presence in the high-growth international markets bode well. Notably, many of its international franchisees continue to generate robust returns.
However, though the U.S. dollar weakened slightly in 2016 compared to the previous year, the negative currency impact is a concern for Domino’s Pizza as it has sizeable international operations.
Moreover, Domino’s Pizza has undertaken a number of sales-building efforts which offer long-term advantages. However, costs involved are expected to continue hurting margins in the near term. Also, performance-based incentives, compensation and labor costs are resulting in higher expenses and may put margins under increased pressure.
Zacks Rank & Other Stocks to Consider
Domino’s Pizza currently has a Zacks Rank #2 (Buy). Other favorably placed stocks in this sector include Papa John's International Inc. (PZZA - Free Report) , McDonald's Corp. (MCD - Free Report) and The Wendy's Company (WEN - Free Report) . All these stocks carry the same rank as Domino’s Pizza. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Papa John’s 2016 earnings moved up 2.4% over the last 60 days. Meanwhile, for the full year, EPS is expected to improve 19.9%.
The Zacks Consensus Estimate for McDonald's 2016 earnings climbed 2.3% over the last 60 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 6.16%.
Wendy’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 28.38%. Further, for 2016, EPS is expected to grow 23.6%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>