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After Earnings, Is Domino's Pizza (DPZ) a Great Stock to Buy?
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Domino’s Pizza (DPZ - Free Report) reported third-quarter earnings and revenues that beat Wall Street expectations last Thursday. However, the company’s stock price has sunk since then.
This international giant is the world’s largest pizza delivery company and the second largest pizza restaurant chain, with more than 14,400 locations in over 85 markets. On top of that, Domino’s is a Zacks Rank #2 (Buy) and sports an overall VGM grade of “B.”
Today, we are going to explore the pizza chain’s most recent earnings and some of its current fundamentals to help show why Domino’s is a solid stock for investors at the moment.
Earnings Recap
Domino’s revenues jumped 13.6% in its third-quarter to hit $643 million, driven in part by an increase in volume and higher supply chain revenues. The company’s U.S. same-store sales climbed 8.4%, which the company cited as it 26th straight quarter of domestic gains in this very important category.
The pizza chain is also extremely popular internationally—in Europe especially. This was reflected in the company’s 5.1% increase in international same-store sales, helping mark over two straight decades of global growth. Domino’s added 217 stores last quarter, with 164 opened outside of the U.S. The company has added over 1,150 new stores over the last four quarters.
Domino’s revenue growth helped net income pop over 19%, driven by the gains in same-store sales. However, operating expenses rose as well, as general and administrative costs climbed over 11.5%.
What’s more, Domino’s earnings jumped from $0.96 per share in the year-ago period to $1.18 per share, which was partially bolstered by share repurchases. Domino’s purchased roughly 4.6 million shares at an average price of $191.62 per share, which marked just over a 2% premium compared to yesterday’s closing price.
Along with the large number of shares that the company bought back, Domino’s made an accounting change that positively impacted earnings by roughly $0.07. The company is still accessing how this change will impact its business and reporting metrics.
It would seem that Domino’s third-quarter highlights should have been one that many investors liked, but its share price has dipped more than 11% since the report. Perhaps investors are worrying about long-term debt or slowing growth rates, but regardless, DPZ is showing plenty of strength still. Let’s take a closer look.
VGM Scores
The company’s 9.61% cash flow growth nearly doubles the “Retail – Restaurants” industry average. Accompanied by its 1.49 current ratio and a sales to assets ratio of 3.55, which both crush its industry’s averages, help show that Domino’s is growing at an impressive rate.
Based on our current Zacks Consensus estimates, Domino’s revenues are expected to soar 12.25% this quarter and 13.96% for the year to hit an upward estimate of $2.83 billion. Domino’s earnings are projected to skyrocket 34% this quarter and 34.45% for the year.
Domino’s has received four upward earnings estimate revisions for its current quarter, all within the last 60 days. In this same time frame, the company received five positive revisions for its full-year, against zero downgrades.
As many investors know already, upward earnings estimate revisions often leads to upward stock price movement. And Domino’s has a solid track record of beating estimates, having topped earnings estimates in the trailing six quarters
What’s more, shares of Domino’s have climbed 20.74% so far this year, which easily beats the S&P 500 and blows away the “Retail – Restaurants” industry’s nearly 2% loss.
Bottom Line
Domino’s reported better-than-expected quarterly earnings and revenues, and based on our current consensus estimates, those trends are set to continue in a big way this quarter and for its full-year. Still, since Domino’s reported earnings on Oct. 12, its stock price has tanked and its shares now rest over 16% below their 52-week high.
It seems that perhaps some investors hoped for more from Domino’s, as the company is currently trading at 33.26x earnings.
Yet the international pizza delivery power is projected to keep growing, with earnings projected to skyrocket well over 30% this quarter and for the year. Now might be a time to think about taking a bite out of Domino’s at a bit of a discount.
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After Earnings, Is Domino's Pizza (DPZ) a Great Stock to Buy?
Domino’s Pizza (DPZ - Free Report) reported third-quarter earnings and revenues that beat Wall Street expectations last Thursday. However, the company’s stock price has sunk since then.
This international giant is the world’s largest pizza delivery company and the second largest pizza restaurant chain, with more than 14,400 locations in over 85 markets. On top of that, Domino’s is a Zacks Rank #2 (Buy) and sports an overall VGM grade of “B.”
Today, we are going to explore the pizza chain’s most recent earnings and some of its current fundamentals to help show why Domino’s is a solid stock for investors at the moment.
Earnings Recap
Domino’s revenues jumped 13.6% in its third-quarter to hit $643 million, driven in part by an increase in volume and higher supply chain revenues. The company’s U.S. same-store sales climbed 8.4%, which the company cited as it 26th straight quarter of domestic gains in this very important category.
The pizza chain is also extremely popular internationally—in Europe especially. This was reflected in the company’s 5.1% increase in international same-store sales, helping mark over two straight decades of global growth. Domino’s added 217 stores last quarter, with 164 opened outside of the U.S. The company has added over 1,150 new stores over the last four quarters.
Domino’s revenue growth helped net income pop over 19%, driven by the gains in same-store sales. However, operating expenses rose as well, as general and administrative costs climbed over 11.5%.
What’s more, Domino’s earnings jumped from $0.96 per share in the year-ago period to $1.18 per share, which was partially bolstered by share repurchases. Domino’s purchased roughly 4.6 million shares at an average price of $191.62 per share, which marked just over a 2% premium compared to yesterday’s closing price.
Along with the large number of shares that the company bought back, Domino’s made an accounting change that positively impacted earnings by roughly $0.07. The company is still accessing how this change will impact its business and reporting metrics.
It would seem that Domino’s third-quarter highlights should have been one that many investors liked, but its share price has dipped more than 11% since the report. Perhaps investors are worrying about long-term debt or slowing growth rates, but regardless, DPZ is showing plenty of strength still. Let’s take a closer look.
VGM Scores
The company’s 9.61% cash flow growth nearly doubles the “Retail – Restaurants” industry average. Accompanied by its 1.49 current ratio and a sales to assets ratio of 3.55, which both crush its industry’s averages, help show that Domino’s is growing at an impressive rate.
Based on our current Zacks Consensus estimates, Domino’s revenues are expected to soar 12.25% this quarter and 13.96% for the year to hit an upward estimate of $2.83 billion. Domino’s earnings are projected to skyrocket 34% this quarter and 34.45% for the year.
Domino’s has received four upward earnings estimate revisions for its current quarter, all within the last 60 days. In this same time frame, the company received five positive revisions for its full-year, against zero downgrades.
As many investors know already, upward earnings estimate revisions often leads to upward stock price movement. And Domino’s has a solid track record of beating estimates, having topped earnings estimates in the trailing six quarters
What’s more, shares of Domino’s have climbed 20.74% so far this year, which easily beats the S&P 500 and blows away the “Retail – Restaurants” industry’s nearly 2% loss.
Bottom Line
Domino’s reported better-than-expected quarterly earnings and revenues, and based on our current consensus estimates, those trends are set to continue in a big way this quarter and for its full-year. Still, since Domino’s reported earnings on Oct. 12, its stock price has tanked and its shares now rest over 16% below their 52-week high.
It seems that perhaps some investors hoped for more from Domino’s, as the company is currently trading at 33.26x earnings.
Yet the international pizza delivery power is projected to keep growing, with earnings projected to skyrocket well over 30% this quarter and for the year. Now might be a time to think about taking a bite out of Domino’s at a bit of a discount.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>