A month has gone by since the last earnings report for Domino's Pizza Inc (DPZ - Free Report) . Shares have lost about 2.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Domino's Q4 Earnings & Revenues Top Estimates
Domino's posted robust fourth-quarter 2016 results, with both earnings and revenues beating the Zacks Consensus Estimate.
Performance in Detail
Adjusted earnings of $1.48 per share beat the Zacks Consensus Estimate of $1.43 by 3.5%. Earnings climbed 28.7% year over year on strong sales.
Quarterly revenues increased 10.6% year over year to $819.4 million and surpassed the Zacks Consensus Estimate of $773 million by 6%. The improvement was backed by higher supply chain revenues, increased domestic franchise and company-owned stores revenues as well as higher franchise international revenues.
Comps
Global retail sales (including total sales of franchise and company-owned units) were up 7% year over year. The increase was primarily due to strong comps from domestic stores. Excluding foreign currency impact, global retail sales gained 9.7%.
During the quarter, the company’s domestic stores (including company-owned and franchise stores) comps increased 12.2% compared with 10.7% growth in the year-ago quarter. However, domestic stores comps grew 13% in the previous quarter.
The company experienced year-over-year comps growth of 13.7% at company-owned stores, higher than 10% comps growth recorded in the year-ago quarter, but lower than the 13.8% increase in the last quarter. Domestic franchise store comps grew 12.1%, better than 10.7% recorded a year ago but weaker than 12.9% growth in the preceding quarter.
Comps at international stores, excluding foreign currency translation, grew 4.3%. This was lower than the prior quarter and the year-ago quarter improvement of 6.6% and 8.6%, respectively.
Margins
The company’s operating margin contracted 10 basis points to 31.1% in the quarter. The drop in the consolidated operating margin was primarily because of higher food cost, increased transaction-related expenses and a rise in depreciation expenses owing to the company’s Pizza Theater reimaging program. Nevertheless, lower insurance expenses benefited the operating margin and somewhat offset these declines.
2016 Results
Domino's full-year adjusted earnings of $4.30 beat the Zacks Consensus Estimate of $4.25 by 1.2%. Furthermore, it increased 24.6% from the year-ago quarter figure of $3.45 on the back of higher revenues.
Full-year revenues of $2.47 billion topped the Zacks Consensus Estimate of around $2.43 billion by nearly 2% and increased 11.6% year over year.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter.
VGM Scores
At this time, Domino's Pizza's stock has a great Growth Score of 'A', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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A month has gone by since the last earnings report for Domino's Pizza Inc (DPZ - Free Report) . Shares have lost about 2.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Domino's Q4 Earnings & Revenues Top Estimates
Domino's posted robust fourth-quarter 2016 results, with both earnings and revenues beating the Zacks Consensus Estimate.
Performance in Detail
Adjusted earnings of $1.48 per share beat the Zacks Consensus Estimate of $1.43 by 3.5%. Earnings climbed 28.7% year over year on strong sales.
Quarterly revenues increased 10.6% year over year to $819.4 million and surpassed the Zacks Consensus Estimate of $773 million by 6%. The improvement was backed by higher supply chain revenues, increased domestic franchise and company-owned stores revenues as well as higher franchise international revenues.
Comps
Global retail sales (including total sales of franchise and company-owned units) were up 7% year over year. The increase was primarily due to strong comps from domestic stores. Excluding foreign currency impact, global retail sales gained 9.7%.
During the quarter, the company’s domestic stores (including company-owned and franchise stores) comps increased 12.2% compared with 10.7% growth in the year-ago quarter. However, domestic stores comps grew 13% in the previous quarter.
The company experienced year-over-year comps growth of 13.7% at company-owned stores, higher than 10% comps growth recorded in the year-ago quarter, but lower than the 13.8% increase in the last quarter. Domestic franchise store comps grew 12.1%, better than 10.7% recorded a year ago but weaker than 12.9% growth in the preceding quarter.
Comps at international stores, excluding foreign currency translation, grew 4.3%. This was lower than the prior quarter and the year-ago quarter improvement of 6.6% and 8.6%, respectively.
Margins
The company’s operating margin contracted 10 basis points to 31.1% in the quarter. The drop in the consolidated operating margin was primarily because of higher food cost, increased transaction-related expenses and a rise in depreciation expenses owing to the company’s Pizza Theater reimaging program. Nevertheless, lower insurance expenses benefited the operating margin and somewhat offset these declines.
2016 Results
Domino's full-year adjusted earnings of $4.30 beat the Zacks Consensus Estimate of $4.25 by 1.2%. Furthermore, it increased 24.6% from the year-ago quarter figure of $3.45 on the back of higher revenues.
Full-year revenues of $2.47 billion topped the Zacks Consensus Estimate of around $2.43 billion by nearly 2% and increased 11.6% year over year.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter.
VGM Scores
At this time, Domino's Pizza's stock has a great Growth Score of 'A', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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