A month has gone by since the last earnings report for Domino's Pizza, Inc. (DPZ - Free Report) . Shares have added about 4.6% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is DPZ due for a pullback? 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.
Recent Earnings
Domino’s Pizza's fourth-quarter 2017 earnings matched the Zacks Consensus Estimate while revenues missed the same.
Adjusted earnings came in at $1.94 per share and improved 31.1% year over year on higher net income and lower diluted share count as a result of share repurchases.
Quarterly revenues were up 8.8% year over year to $891.5 million but missed the Zacks Consensus Estimate by 1.1%. The improvement was backed by higher supply chain revenues as well as higher royalties from retail sales and positive currency impacts.
Notably, the fourth quarter marked the 27th consecutive quarter of positive U.S. comparable sales and 96th consecutive quarter of positive international comps.
Comps
Global retail sales (including total sales of franchise and company-owned units) were up 11.7% year over year. The uptick was primarily owing to strong comps from international stores. Excluding foreign currency impact, global retail sales increased 9.9%.
In the quarter under review, the company’s domestic stores (including company-owned and franchise stores) comps improved 4.2%. This compared unfavorably with 7.7% growth in the year-ago quarter and an 8.4% rise in the previous quarter.
At domestic company-owned stores, Domino’s experienced year-over-year comps growth of 3.8%, lower than 8.7% comps growth in the year-ago quarter and an 8.4% rise last quarter. Also, domestic franchise stores comps grew 4.2% comparatively lower than comps growth of 7.6% and 8.4%, in the year-ago quarter and the preceding quarter, respectively.
Comps at international stores, excluding foreign currency translation, were up 12.1%. This was better than the prior-quarter improvement of 5.1% but lower than the year-ago quarter rise of 14.8%.
Margins
Domino’s operating margin increased 40 bps year over year to 31.5% in the quarter under review. Also, the net income margin rose 160 bps to 10.5%. The uptick in the company’s net income was primarily driven by an increase in comps growth and store count as well as higher supply chain volumes and global royalty revenues. The adoption of the new equity-based compensation accounting standard too drove net income. However, the increase was partially offset by rise in net interest expenses on higher net debt levels.
Balance Sheet
As of Dec 31, 2017, cash and cash equivalents were $35.8 million down from $42.8 million as of Jan 1, 2017. Long-term debt as of Dec 31, 2017 was $3.1 billion, down from $2.1 billion million as of Jan 1, 2017.
Inventory, at the end of the fourth quarter, amounted to $40 million, down from $40.2 billion in fourth-quarter of 2016.
Cash flows from operating activities as of Dec 31, 2017 was $339 million compared with $287.2 million as of Jan 1, 2017.
Domino’s spent $90 million on capital expenditures, $84 million on dividends and $1.1 billion on share repurchase in 2017.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to four lower.
VGM Scores
At this time, DPZ has a great Growth Score of A, though it is lagging a lot on the momentum front with an F. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, DPZ has a Zacks Rank #3 (Hold). We expect an in-line 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 added about 4.6% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is DPZ due for a pullback? 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.
Recent Earnings
Domino’s Pizza's fourth-quarter 2017 earnings matched the Zacks Consensus Estimate while revenues missed the same.
Adjusted earnings came in at $1.94 per share and improved 31.1% year over year on higher net income and lower diluted share count as a result of share repurchases.
Quarterly revenues were up 8.8% year over year to $891.5 million but missed the Zacks Consensus Estimate by 1.1%. The improvement was backed by higher supply chain revenues as well as higher royalties from retail sales and positive currency impacts.
Notably, the fourth quarter marked the 27th consecutive quarter of positive U.S. comparable sales and 96th consecutive quarter of positive international comps.
Comps
Global retail sales (including total sales of franchise and company-owned units) were up 11.7% year over year. The uptick was primarily owing to strong comps from international stores. Excluding foreign currency impact, global retail sales increased 9.9%.
In the quarter under review, the company’s domestic stores (including company-owned and franchise stores) comps improved 4.2%. This compared unfavorably with 7.7% growth in the year-ago quarter and an 8.4% rise in the previous quarter.
At domestic company-owned stores, Domino’s experienced year-over-year comps growth of 3.8%, lower than 8.7% comps growth in the year-ago quarter and an 8.4% rise last quarter. Also, domestic franchise stores comps grew 4.2% comparatively lower than comps growth of 7.6% and 8.4%, in the year-ago quarter and the preceding quarter, respectively.
Comps at international stores, excluding foreign currency translation, were up 12.1%. This was better than the prior-quarter improvement of 5.1% but lower than the year-ago quarter rise of 14.8%.
Margins
Domino’s operating margin increased 40 bps year over year to 31.5% in the quarter under review. Also, the net income margin rose 160 bps to 10.5%. The uptick in the company’s net income was primarily driven by an increase in comps growth and store count as well as higher supply chain volumes and global royalty revenues. The adoption of the new equity-based compensation accounting standard too drove net income. However, the increase was partially offset by rise in net interest expenses on higher net debt levels.
Balance Sheet
As of Dec 31, 2017, cash and cash equivalents were $35.8 million down from $42.8 million as of Jan 1, 2017. Long-term debt as of Dec 31, 2017 was $3.1 billion, down from $2.1 billion million as of Jan 1, 2017.
Inventory, at the end of the fourth quarter, amounted to $40 million, down from $40.2 billion in fourth-quarter of 2016.
Cash flows from operating activities as of Dec 31, 2017 was $339 million compared with $287.2 million as of Jan 1, 2017.
Domino’s spent $90 million on capital expenditures, $84 million on dividends and $1.1 billion on share repurchase in 2017.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to four lower.
VGM Scores
At this time, DPZ has a great Growth Score of A, though it is lagging a lot on the momentum front with an F. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, DPZ has a Zacks Rank #3 (Hold). We expect an in-line 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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