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Domino's (DPZ) Stock Up on Q2 Earnings and Revenues Beat

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Domino's Pizza, Inc. (DPZ - Free Report) reported better-than-expected results for second-quarter fiscal 2021, wherein both earnings and revenues not only beat their respective Zacks Consensus Estimate but also improved year over year. Following the results, the company’s shares are up 2.5% in pre-market trading session.

The company reported strong U.S. same-store sales. The fiscal second quarter marked the 41st straight quarter of positive U.S. comparable sales and 110th consecutive quarter of positive international comps.

Earnings & Revenues Discussion

The company reported adjusted earnings per share of $3.12 per share, which topped the Zacks Consensus Estimate of $2.86 by 9.1%. The reported figure improved 4.3% on a year-over-year basis. The company’s earnings benefited from lower weighted average diluted share count owing to share repurchase. The gain was overshadowed by lower net income.

Revenues of $1,032.5 million surpassed the consensus mark of $967 million and rose 12.2% on a year-over-year basis. The upside was driven by U.S. and international same-store sales growth and an increase in global store count in the trailing four quarters. This, in turn, resulted in higher supply chain, U.S. stores and international franchise revenues.

In second-quarter fiscal 2021, it opened 256 stores, comprising 238 net new U.S. stores and 203 net new international stores.

Dominos Pizza Inc Price, Consensus and EPS Surprise Dominos Pizza Inc Price, Consensus and EPS Surprise

Dominos Pizza Inc price-consensus-eps-surprise-chart | Dominos Pizza Inc Quote

Comps

Global retail sales (including total sales of franchise and company-owned units) increased 21.6% on a year-over-year basis for the fiscal second quarter. The upside can be primarily attributed to growth in sales at domestic stores (up 7.4%) and international stores (up 39.7%).  Excluding foreign currency impact, global retail sales increased 17.1% from the prior-year quarter.

For the fiscal second quarter, comps at Domino’s domestic stores (including company-owned and franchise stores) increased 3.5% from the year-ago quarter.

At domestic company-owned stores, Domino’s comps declined 2.6% year over year, compared with 16.9% growth in the year-ago period. Domestic franchise stores comps increased 3.9% year over year compared with 16% growth in the prior-year quarter.

Comps at international stores, excluding foreign currency translation, were up 13.9% year over year. This was higher than 1.3% improvement in the year-ago quarter.

Margins

Domino’s operating margin expanded 70 basis points (bps) year over year to 39.5% for the reported quarter. Net income margin for the quarter came in at 11.3%, down 160 bps from the prior-year level.

Balance Sheet

As of Jun 20, 2021, cash and cash equivalents totaled $292.1 million, down from $168.8 million on Jan 3, 2021. It had $157.5 million of available borrowing capacity under its 2021 variable funding notes, net of letters of credit issued of $42.5 million, at second-quarter fiscal 2021-end.

Long-term debt at fiscal second quarter-end was $5 billion, compared with $4.1 billion at the end of first-quarter 2021. Inventory amounted to $59.2 million compared with $66.7 million at the send of first-quarter 2021.

Net cash provided by operations totaled $295.4 million at fiscal second quarter-end. For the quarter under review, Domino’s incurred capital expenditures of $33.2 million.

For the fiscal second quarter, the company repurchased and retired 2,012,596 shares of its common stock under the share repurchase program. On Jul 20, the company announced a new share repurchase program up to $1 billion.

Zacks Rank & Key Picks

Domino's currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering in the same space include Dine Brands Global, Inc. (DIN - Free Report) , Ruth's Hospitality Group, Inc. (RUTH - Free Report) and The Cheesecake Factory Incorporated (CAKE - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Dine Brands Global 2021 earnings are likely to witness growth of 269.3%.

Ruth's Hospitality Group 2021 earnings are likely to witness growth of 381.6%.

Cheesecake Factory has an impressive long-term earnings growth rate of 8.5%.

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