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Why Is Domino's Pizza (DPZ) Up 9.7% Since Last Earnings Report?
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It has been about a month since the last earnings report for Domino's Pizza (DPZ - Free Report) . Shares have added about 9.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Domino's Pizza 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 drivers.
Domino's Q4 Earnings & Revenues Miss Estimates, Rise Y/Y
Domino's reported fourth-quarter fiscal 2020 results, with earnings and revenues missing the Zacks Consensus Estimate. Earnings missed the consensus estimate for the second straight quarter, while revenues missed the mark after beating the same in trailing five quarters.
The company also reported robust U.S. same-store sales. The fiscal fourth quarter also marked the 39th straight quarter of positive U.S. comparable sales and the 108th consecutive quarter of positive international comps.
Earnings & Revenues Discussion
In the quarter under review, adjusted earnings per share (EPS) were $3.46 per share that missed the Zacks Consensus Estimate of $3.79. However, the reported figure increased 10.5% on a year-over-year basis. The bottom line was primarily driven by higher net income.
Quarterly revenues of $1,356.6 million missed the consensus mark of $1,383 million. However, the top line rose 17.9% on a year-over-year basis. Notably, robust same-store sales and increase in store count (during the trailing four quarters) in the United States and international markets drove fiscal fourth-quarter revenues. The company opened 624 stores in the fiscal 2020. In the fiscal fourth quarter, the company opened 388 stores, comprising 116 net new U.S. stores and 272 net new international stores. International franchise revenues also improved.
Comps
Global retail sales (including total sales of franchise and company-owned units) increased 21.7% on a year-over-year basis in the fiscal fourth quarter. The upside can primarily be attributed to growth in sales at domestic stores (up 22.8%) and at international stores (up 20.7%). Excluding foreign currency impact, global retail sales increased 20.9%.
In the fiscal fourth quarter, comps at Domino’s domestic stores (including company-owned and franchise stores) increased 11.2%. Moreover, it was higher than the prior-year quarter’s increase of 3.4%.
At domestic company-owned stores, Domino’s comps rose 8.1% year over year, higher than 3.9% in the year-ago quarter’s reported figure. Moreover, domestic franchise stores comps increased 11.4% year over year compared with 3.3% growth in the prior-year quarter’s levels.
Comps at international stores, excluding foreign currency translation, were up 7.3% year over year. This was higher than improvement of 1.7% in the year-ago quarter.
Margins
Domino’s operating margin expanded 60 basis points (bps) year over year to 39.5% in the reported quarter. Net income margin during the quarter came in at 11.2%, thereby matching prior-year quarter’s levels.
Balance Sheet
As of Jan 3, 2020, cash and cash equivalents totaled $168.8 million, down from $190.6 million as of Dec 29, 2019. Long-term debt at the end of the fiscal fourth quarter was $4,116 million compared with $4,071.1 million as of Dec 29, 2019. Inventory amounted to $66.7 million compared with $53 million in the prior-year quarter.
Cash flows from operating activities totaled $592.8 million at the end of fiscal fourth quarter. In the quarter under review, Domino’s incurred capital expenditures of $88.8 million.
The company declared quarterly cash dividend of 94 cents, to be paid out on Mar 30, 2021 to shareholders on record as of Mar 15.
2020 Highlights
Total revenues in fiscal 2020 came in at $4,117.4 million compared with $3,618.8 million in 2019.
General and administrative expenses in fiscal 2020 came in at $406.6 million compared with $382.3 million in 2019.
In fiscal 2020, adjusted EPS came in at $12.01 compared with $9.57 in the previous year.
Two- to Three-Year Outlook
Owing to the uncertainty related to the pandemic, the company did not provide earnings guidance. However, it announced a new two-to three year outlook for certain business metrics. Notably, the company expects global retail sales growth, (excluding foreign currency impact) in the range of 6-10% for the above-mentioned time frame. Also, it expects global net unit growth in the range of 6-8%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Domino's Pizza has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Domino's Pizza has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Domino's Pizza (DPZ) Up 9.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Domino's Pizza (DPZ - Free Report) . Shares have added about 9.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Domino's Pizza 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 drivers.
Domino's Q4 Earnings & Revenues Miss Estimates, Rise Y/Y
Domino's reported fourth-quarter fiscal 2020 results, with earnings and revenues missing the Zacks Consensus Estimate. Earnings missed the consensus estimate for the second straight quarter, while revenues missed the mark after beating the same in trailing five quarters.
The company also reported robust U.S. same-store sales. The fiscal fourth quarter also marked the 39th straight quarter of positive U.S. comparable sales and the 108th consecutive quarter of positive international comps.
Earnings & Revenues Discussion
In the quarter under review, adjusted earnings per share (EPS) were $3.46 per share that missed the Zacks Consensus Estimate of $3.79. However, the reported figure increased 10.5% on a year-over-year basis. The bottom line was primarily driven by higher net income.
Quarterly revenues of $1,356.6 million missed the consensus mark of $1,383 million. However, the top line rose 17.9% on a year-over-year basis. Notably, robust same-store sales and increase in store count (during the trailing four quarters) in the United States and international markets drove fiscal fourth-quarter revenues. The company opened 624 stores in the fiscal 2020. In the fiscal fourth quarter, the company opened 388 stores, comprising 116 net new U.S. stores and 272 net new international stores. International franchise revenues also improved.
Comps
Global retail sales (including total sales of franchise and company-owned units) increased 21.7% on a year-over-year basis in the fiscal fourth quarter. The upside can primarily be attributed to growth in sales at domestic stores (up 22.8%) and at international stores (up 20.7%). Excluding foreign currency impact, global retail sales increased 20.9%.
In the fiscal fourth quarter, comps at Domino’s domestic stores (including company-owned and franchise stores) increased 11.2%. Moreover, it was higher than the prior-year quarter’s increase of 3.4%.
At domestic company-owned stores, Domino’s comps rose 8.1% year over year, higher than 3.9% in the year-ago quarter’s reported figure. Moreover, domestic franchise stores comps increased 11.4% year over year compared with 3.3% growth in the prior-year quarter’s levels.
Comps at international stores, excluding foreign currency translation, were up 7.3% year over year. This was higher than improvement of 1.7% in the year-ago quarter.
Margins
Domino’s operating margin expanded 60 basis points (bps) year over year to 39.5% in the reported quarter. Net income margin during the quarter came in at 11.2%, thereby matching prior-year quarter’s levels.
Balance Sheet
As of Jan 3, 2020, cash and cash equivalents totaled $168.8 million, down from $190.6 million as of Dec 29, 2019. Long-term debt at the end of the fiscal fourth quarter was $4,116 million compared with $4,071.1 million as of Dec 29, 2019. Inventory amounted to $66.7 million compared with $53 million in the prior-year quarter.
Cash flows from operating activities totaled $592.8 million at the end of fiscal fourth quarter. In the quarter under review, Domino’s incurred capital expenditures of $88.8 million.
The company declared quarterly cash dividend of 94 cents, to be paid out on Mar 30, 2021 to shareholders on record as of Mar 15.
2020 Highlights
Total revenues in fiscal 2020 came in at $4,117.4 million compared with $3,618.8 million in 2019.
General and administrative expenses in fiscal 2020 came in at $406.6 million compared with $382.3 million in 2019.
In fiscal 2020, adjusted EPS came in at $12.01 compared with $9.57 in the previous year.
Two- to Three-Year Outlook
Owing to the uncertainty related to the pandemic, the company did not provide earnings guidance. However, it announced a new two-to three year outlook for certain business metrics. Notably, the company expects global retail sales growth, (excluding foreign currency impact) in the range of 6-10% for the above-mentioned time frame. Also, it expects global net unit growth in the range of 6-8%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Domino's Pizza has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Domino's Pizza has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.