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Domino's (DPZ) Stock Up Despite Q3 Earnings & Revenues Miss
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Domino's Pizza, Inc. (DPZ - Free Report) reported third-quarter fiscal 2022 results, with earnings and revenues missing the Zacks Consensus Estimate. The bottom line missed the consensus mark for the fourth consecutive quarter, while the top line lagged for the fifth straight quarter.
Despite the lackluster results, shares of the company increased 7.2% in the pre-market trading session. Positive investor sentiments were witnessed as the company announced better-than-expected expense forecasts for the remainder of fiscal 2022.
Russell Weiner, Domino's Chief Executive Officer, stated, "As we begin the fourth quarter, I believe Domino's is poised to emerge from these volatile times stronger than ever. Combined with our strong carryout business where we have continued to accelerate our momentum, I have never been more confident in the future of Domino's Pizza."
Earnings & Revenue Discussion
Domino's reported adjusted earnings per share (EPS) of $2.79, missing the Zacks Consensus Estimate of $2.95. The figure declined 13.9% from $3.24 reported in the prior-year quarter. DPZ’s earnings were hurt by a reduced net income (on a year-over-year basis), partially offset by a lower weighted average diluted share count owing to share repurchase (in trailing four quarters).
Domino's Pizza Inc Price, Consensus and EPS Surprise
Revenues of $1,068.6 million lagged the consensus mark of $1,069 million. The top line improved 7.1% on a year-over-year basis. The upside was mainly driven by higher supply-chain revenues owing to a rise in market basket pricing and a rise in U.S. retail sales. However, this was partially offset by lower international franchise royalties and fee revenues.
In third-quarter fiscal 2022, Domino's opened 225 stores, comprising 24 net new U.S. stores and 201 net new international stores.
Comps
Global retail sales (including total franchise and company-owned units) declined 1.6% on a year-over-year basis in the fiscal third quarter. The downside was primarily caused by lower international store sales (down 6.8% year over year). Sales at domestic stores increased 4.1% on a year-over-year basis. Excluding the foreign currency impact, global retail sales increased 4.7% from the prior-year quarter’s level.
For the fiscal third quarter, comps at Domino’s domestic stores (including company-owned and franchise stores) increased 2% from the year-ago quarter’s reading.
At domestic company-owned stores, Domino’s comps declined 1.9% year over year compared with a decline of 8.9% reported in the year-ago quarter. Domestic franchise store comps increased 2.2% year over year against a decline of 1.5% reported in the prior-year quarter.
Comps at international stores, excluding foreign currency translation, dropped 1.8% year over year. This was lower than the 8.8% improvement reported in the year-ago quarter.
Margins
During the fiscal third quarter, Domino’s’ gross margin contracted 290 basis points (bps) year over year to 35.7%. Net income margin in the quarter came in at 9.4%, down 270 bps from the prior-year quarter’s level.
Balance Sheet
As of Sep 11, 2022, cash and cash equivalents totaled $114.8 million compared with $114.4 million as of Jun 19, 2022. At the end of third-quarter fiscal 2022, Domino’s had $35.8 million of available borrowing capacity under its 2021 variable funding notes, net of $120 million of outstanding borrowings and letters of credit issued of $44.2 million.
Long-term debt (less current portion) at the end of the fiscal third quarter came in at $5,097.3 million compared with $4,989.6 million reported in the previous quarter. Inventory amounted to $72.6 million compared with $70.2 million at the end of second-quarter fiscal 2022.
Capital expenditures during the quarter came in at $50.5 million compared with $32.7 million reported in the previous quarter.
For the fiscal third quarter, DPZ bought back and retired 490,789 shares of its common stock under the share repurchase program. Domino’s stated the availability of $410.4 million under its buyback program. Also, DPZ declared a quarterly cash dividend of $1.10 per share, payable Dec 30, 2022, to its shareholders of record as of Dec 15, 2022.
2022 Guidance
For the remainder of fiscal 2022, the company expects capital expenditures at $100 million compared with the previous projection of $120 million. General and administrative expense is anticipated in the range of $415-$420 million, down from its previous projection of $420-$428 million.
Wingstop carries a Zacks Rank #2 (Buy). Wingstop has a long-term earnings growth of 11%. Shares of the company have declined 29.2% in the past year.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 17.5% and 18.4%, respectively, from the year-ago period’s levels.
Yum China carries a Zacks Rank #2. Yum China has a long-term earnings growth of 10%. Shares of the company have declined 24.8% in the past year.
The Zacks Consensus Estimate for Yum China's 2023 sales and EPS suggests growth of 19.9% and 85.5%, respectively, from the year-ago period’s levels.
Sprouts Farmers Market carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 15.6%, on average. Shares of the company have increased 22.4% in the past year.
The Zacks Consensus Estimate for Sprouts Farmers Market’s 2023 sales and EPS suggests growth of 5.9% and 7.9%, respectively, from the year-ago period’s levels.
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Domino's (DPZ) Stock Up Despite Q3 Earnings & Revenues Miss
Domino's Pizza, Inc. (DPZ - Free Report) reported third-quarter fiscal 2022 results, with earnings and revenues missing the Zacks Consensus Estimate. The bottom line missed the consensus mark for the fourth consecutive quarter, while the top line lagged for the fifth straight quarter.
Despite the lackluster results, shares of the company increased 7.2% in the pre-market trading session. Positive investor sentiments were witnessed as the company announced better-than-expected expense forecasts for the remainder of fiscal 2022.
Russell Weiner, Domino's Chief Executive Officer, stated, "As we begin the fourth quarter, I believe Domino's is poised to emerge from these volatile times stronger than ever. Combined with our strong carryout business where we have continued to accelerate our momentum, I have never been more confident in the future of Domino's Pizza."
Earnings & Revenue Discussion
Domino's reported adjusted earnings per share (EPS) of $2.79, missing the Zacks Consensus Estimate of $2.95. The figure declined 13.9% from $3.24 reported in the prior-year quarter. DPZ’s earnings were hurt by a reduced net income (on a year-over-year basis), partially offset by a lower weighted average diluted share count owing to share repurchase (in trailing four quarters).
Domino's Pizza Inc Price, Consensus and EPS Surprise
Domino's Pizza Inc price-consensus-eps-surprise-chart | Domino's Pizza Inc Quote
Revenues of $1,068.6 million lagged the consensus mark of $1,069 million. The top line improved 7.1% on a year-over-year basis. The upside was mainly driven by higher supply-chain revenues owing to a rise in market basket pricing and a rise in U.S. retail sales. However, this was partially offset by lower international franchise royalties and fee revenues.
In third-quarter fiscal 2022, Domino's opened 225 stores, comprising 24 net new U.S. stores and 201 net new international stores.
Comps
Global retail sales (including total franchise and company-owned units) declined 1.6% on a year-over-year basis in the fiscal third quarter. The downside was primarily caused by lower international store sales (down 6.8% year over year). Sales at domestic stores increased 4.1% on a year-over-year basis. Excluding the foreign currency impact, global retail sales increased 4.7% from the prior-year quarter’s level.
For the fiscal third quarter, comps at Domino’s domestic stores (including company-owned and franchise stores) increased 2% from the year-ago quarter’s reading.
At domestic company-owned stores, Domino’s comps declined 1.9% year over year compared with a decline of 8.9% reported in the year-ago quarter. Domestic franchise store comps increased 2.2% year over year against a decline of 1.5% reported in the prior-year quarter.
Comps at international stores, excluding foreign currency translation, dropped 1.8% year over year. This was lower than the 8.8% improvement reported in the year-ago quarter.
Margins
During the fiscal third quarter, Domino’s’ gross margin contracted 290 basis points (bps) year over year to 35.7%. Net income margin in the quarter came in at 9.4%, down 270 bps from the prior-year quarter’s level.
Balance Sheet
As of Sep 11, 2022, cash and cash equivalents totaled $114.8 million compared with $114.4 million as of Jun 19, 2022. At the end of third-quarter fiscal 2022, Domino’s had $35.8 million of available borrowing capacity under its 2021 variable funding notes, net of $120 million of outstanding borrowings and letters of credit issued of $44.2 million.
Long-term debt (less current portion) at the end of the fiscal third quarter came in at $5,097.3 million compared with $4,989.6 million reported in the previous quarter. Inventory amounted to $72.6 million compared with $70.2 million at the end of second-quarter fiscal 2022.
Capital expenditures during the quarter came in at $50.5 million compared with $32.7 million reported in the previous quarter.
For the fiscal third quarter, DPZ bought back and retired 490,789 shares of its common stock under the share repurchase program. Domino’s stated the availability of $410.4 million under its buyback program. Also, DPZ declared a quarterly cash dividend of $1.10 per share, payable Dec 30, 2022, to its shareholders of record as of Dec 15, 2022.
2022 Guidance
For the remainder of fiscal 2022, the company expects capital expenditures at $100 million compared with the previous projection of $120 million. General and administrative expense is anticipated in the range of $415-$420 million, down from its previous projection of $420-$428 million.
Zacks Rank & Key Picks
Domino's currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other top-ranked stocks in the Zacks Retail-Wholesale sector are Wingstop Inc. (WING - Free Report) , Yum China Holdings, Inc. (YUMC - Free Report) and Sprouts Farmers Market, Inc. (SFM - Free Report) .
Wingstop carries a Zacks Rank #2 (Buy). Wingstop has a long-term earnings growth of 11%. Shares of the company have declined 29.2% in the past year.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 17.5% and 18.4%, respectively, from the year-ago period’s levels.
Yum China carries a Zacks Rank #2. Yum China has a long-term earnings growth of 10%. Shares of the company have declined 24.8% in the past year.
The Zacks Consensus Estimate for Yum China's 2023 sales and EPS suggests growth of 19.9% and 85.5%, respectively, from the year-ago period’s levels.
Sprouts Farmers Market carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 15.6%, on average. Shares of the company have increased 22.4% in the past year.
The Zacks Consensus Estimate for Sprouts Farmers Market’s 2023 sales and EPS suggests growth of 5.9% and 7.9%, respectively, from the year-ago period’s levels.