We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Domino's Pizza Poised to Grow on Solid Comps, Risks Prevail
Read MoreHide Full Article
On Apr 11, we issued an updated research report on popular pizza delivery company Domino's Pizza, Inc. (DPZ - Free Report) .
Despite the prevailing restaurant recession, Domino’s Pizza has managed to hold its own. The company’s revenues surpassed the Zacks Consensus Estimate in seven out of the last eight quarters. Also, it has mostly recorded positive earnings surprises in the recent quarters.
Moreover, the fourth quarter of 2016 marked the 23rd and 92nd consecutive quarter of positive same-store-sales domestically and internationally, respectively. Going forward, the company’s initiatives on the digital front, focus on re-imaging and other sales boosting strategies are expected to help sustain the momentum.
Growth Drivers
Domino’s Pizza continues to boost sales through regular limited time offers (LTO). Moreover, the company’s remodeling initiative is anticipated to continue enhancing its potential as a brand and augment guest experience.
Meanwhile, Domino's Pizza’s world-class digital ordering platforms like Google Home, Facebook Messenger, Apple Watch, Amazon Echo, Twitter and ordering via a Pizza emoji on text should further continue to boost digital orders. The extended ways to order a pizza has kept it in the forefront of digital ordering and customer convenience.
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 as well as ROE expansion.
Additionally, the company’s commitment to expand presence in the high-growth international market seems to bode well. Notably, many of its international franchisees continue to generate robust returns.
Concerns
It is to be noted that 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.
Given its sizeable international operations, Domino’s Pizza is exposed to risks of fluctuations in currency exchange rates, which impacts the company’s top line. Moreover, a challenging industry backdrop remains a potent cause of concern for most restaurant chains like Jack in the Box Inc. (JACK - Free Report) and Brinker International, Inc. (EAT - Free Report) and many others. Though Domino’s Pizza has been faring well so far, the continued slowdown in the industry at large might hamper its prospects, going forward.
Bottom Line
Nevertheless, the demand for pizzas is unlikely to go down in the coming days and pizza giants like Domino’s Pizza and Papa John's International Inc. (PZZA - Free Report) ride on this certitude. In fact, shares of the company increased 27% over the last one year against the Zacks categorized Retail–Restaurants industry’s loss of 3.9%.
Also, upward estimate revisions reflect optimism regarding the stock’s prospects. The Zacks Consensus Estimate for current quarter and current-year earnings moved north by 2.7% and 1.6%, respectively, over the last 60 days.
Despite certain headwinds, Domino’s Pizza’s operational advantages, 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, going forward.
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Domino's Pizza Poised to Grow on Solid Comps, Risks Prevail
On Apr 11, we issued an updated research report on popular pizza delivery company Domino's Pizza, Inc. (DPZ - Free Report) .
Despite the prevailing restaurant recession, Domino’s Pizza has managed to hold its own. The company’s revenues surpassed the Zacks Consensus Estimate in seven out of the last eight quarters. Also, it has mostly recorded positive earnings surprises in the recent quarters.
Moreover, the fourth quarter of 2016 marked the 23rd and 92nd consecutive quarter of positive same-store-sales domestically and internationally, respectively. Going forward, the company’s initiatives on the digital front, focus on re-imaging and other sales boosting strategies are expected to help sustain the momentum.
Growth Drivers
Domino’s Pizza continues to boost sales through regular limited time offers (LTO). Moreover, the company’s remodeling initiative is anticipated to continue enhancing its potential as a brand and augment guest experience.
Meanwhile, Domino's Pizza’s world-class digital ordering platforms like Google Home, Facebook Messenger, Apple Watch, Amazon Echo, Twitter and ordering via a Pizza emoji on text should further continue to boost digital orders. The extended ways to order a pizza has kept it in the forefront of digital ordering and customer convenience.
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 as well as ROE expansion.
Additionally, the company’s commitment to expand presence in the high-growth international market seems to bode well. Notably, many of its international franchisees continue to generate robust returns.
Concerns
It is to be noted that 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.
Given its sizeable international operations, Domino’s Pizza is exposed to risks of fluctuations in currency exchange rates, which impacts the company’s top line. Moreover, a challenging industry backdrop remains a potent cause of concern for most restaurant chains like Jack in the Box Inc. (JACK - Free Report) and Brinker International, Inc. (EAT - Free Report) and many others. Though Domino’s Pizza has been faring well so far, the continued slowdown in the industry at large might hamper its prospects, going forward.
Bottom Line
Nevertheless, the demand for pizzas is unlikely to go down in the coming days and pizza giants like Domino’s Pizza and Papa John's International Inc. (PZZA - Free Report) ride on this certitude. In fact, shares of the company increased 27% over the last one year against the Zacks categorized Retail–Restaurants industry’s loss of 3.9%.
Also, upward estimate revisions reflect optimism regarding the stock’s prospects. The Zacks Consensus Estimate for current quarter and current-year earnings moved north by 2.7% and 1.6%, respectively, over the last 60 days.
Despite certain headwinds, Domino’s Pizza’s operational advantages, 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, going forward.
Domino’s Pizza currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>