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Domino's Pizza, Inc. (DPZ - Free Report) reported first-quarter fiscal 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.
Following the announcement, shares of the company moved up 4.7% in the pre-market trading session. The company benefited from robust U.S and international same-store sales.
Earnings & Revenue Discussion
In the quarter, Domino's reported adjusted earnings per share (EPS) of $2.93, beating the Zacks Consensus Estimate of $2.66. The figure increased 17.2% from $2.50 reported in the prior-year quarter.
Revenues of $1,024.4 million lagged the consensus mark of $1,029 million. However, the top line improved 1.3% on a year-over-year basis. The upside was mainly driven by higher supply-chain revenues (owing to a rise in market basket pricing), U.S. franchise royalties and fees, and U.S. franchise advertising revenues.
In first-quarter fiscal 2023, Domino's opened 128 stores, comprising 22 net new U.S. stores and 106 net new international stores.
Domino's Pizza Inc Price, Consensus and EPS Surprise
Global retail sales (including total franchise and company-owned units) rose 2.2% on a year-over-year basis in the fiscal first quarter. The upside was driven by higher U.S stores (up 5.1% year over year). However, international store sales declined 0.5% year over year. Excluding foreign-currency impacts, global retail sales increased 5.9% from the prior-year quarter.
For the fiscal first quarter, comps at Domino’s domestic stores (including company-owned and franchise stores) increased 3.6% from the year-ago quarter’s reading.
At domestic company-owned stores, Domino’s comps increased 7.3% year over year against a decline of 10.5% reported in the year-ago quarter. Domestic franchise store comps increased 3.4% year over year against a decline of 3.2% reported in the prior-year quarter.
Comps at international stores, excluding foreign currency translation, increased 1.2% year over year compared with growth of 1.2% reported in the prior-year quarter.
Margins
In the fiscal first quarter, Domino’s’ gross margin expanded 110 basis points (bps) year over year to 37.6%. The net income margin was 10.2%, up 120 bps from the year-ago quarter.
Balance Sheet
As of Mar 26, cash and cash equivalents totaled $154.2 million compared with $60.4 million as of Jan 1. At the end of first-quarter fiscal 2023, Domino’s had $277.8 million of available borrowing capacity under its 2021 and 2022 variable funding notes, and net of letters of credit issued was $42.2 million.
Long-term debt (less current portion) at the fiscal first-quarter end was $4,955.2 million compared with $4,967.4 million reported in the previous quarter. Inventory amounted to $69.3 million compared with $81.6 million at the end of fourth-quarter fiscal 2022.
Capital expenditure in the quarter totaled $19 million compared with $12.5 million reported in the previous quarter.
2023 Guidance
For fiscal 2023, the company expects capital expenditure of $90-$100 million. General and administrative expenses are anticipated at $425-$435 million.
Arcos Dorados currently sports a Zacks Rank #1 (Strong Buy). ARCO has a long-term earnings growth rate of 7.8%. The stock has gained 6.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arcos Dorados’ 2024 sales and EPS suggests growth of 7.8% and 14.7%, respectively, from the year-ago period’s reported levels.
Chuy’s Holdings carries a Zacks Rank #2 (Buy). CHUY has a trailing four-quarter earnings surprise of 19.1%, on average. Shares of CHUY have increased 36.2% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings 2023 sales and EPS suggests growth of 10.8% and 19%, respectively, from the year-ago period’s reported levels.
Darden carries a Zacks Rank #2. DRI has a long-term earnings growth rate of 10.1%. The stock has improved 11.3% in the past year.
The Zacks Consensus Estimate for Darden’s 2024 sales and EPS suggests growth of 5.4% and 9.9%, respectively, from the year-ago period’s reported levels.
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Domino's (DPZ) Q1 Earnings Surpass Estimates, Stock Gains
Domino's Pizza, Inc. (DPZ - Free Report) reported first-quarter fiscal 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.
Following the announcement, shares of the company moved up 4.7% in the pre-market trading session. The company benefited from robust U.S and international same-store sales.
Earnings & Revenue Discussion
In the quarter, Domino's reported adjusted earnings per share (EPS) of $2.93, beating the Zacks Consensus Estimate of $2.66. The figure increased 17.2% from $2.50 reported in the prior-year quarter.
Revenues of $1,024.4 million lagged the consensus mark of $1,029 million. However, the top line improved 1.3% on a year-over-year basis. The upside was mainly driven by higher supply-chain revenues (owing to a rise in market basket pricing), U.S. franchise royalties and fees, and U.S. franchise advertising revenues.
In first-quarter fiscal 2023, Domino's opened 128 stores, comprising 22 net new U.S. stores and 106 net new international stores.
Domino's Pizza Inc Price, Consensus and EPS Surprise
Domino's Pizza Inc price-consensus-eps-surprise-chart | Domino's Pizza Inc Quote
Comps
Global retail sales (including total franchise and company-owned units) rose 2.2% on a year-over-year basis in the fiscal first quarter. The upside was driven by higher U.S stores (up 5.1% year over year). However, international store sales declined 0.5% year over year. Excluding foreign-currency impacts, global retail sales increased 5.9% from the prior-year quarter.
For the fiscal first quarter, comps at Domino’s domestic stores (including company-owned and franchise stores) increased 3.6% from the year-ago quarter’s reading.
At domestic company-owned stores, Domino’s comps increased 7.3% year over year against a decline of 10.5% reported in the year-ago quarter. Domestic franchise store comps increased 3.4% year over year against a decline of 3.2% reported in the prior-year quarter.
Comps at international stores, excluding foreign currency translation, increased 1.2% year over year compared with growth of 1.2% reported in the prior-year quarter.
Margins
In the fiscal first quarter, Domino’s’ gross margin expanded 110 basis points (bps) year over year to 37.6%. The net income margin was 10.2%, up 120 bps from the year-ago quarter.
Balance Sheet
As of Mar 26, cash and cash equivalents totaled $154.2 million compared with $60.4 million as of Jan 1. At the end of first-quarter fiscal 2023, Domino’s had $277.8 million of available borrowing capacity under its 2021 and 2022 variable funding notes, and net of letters of credit issued was $42.2 million.
Long-term debt (less current portion) at the fiscal first-quarter end was $4,955.2 million compared with $4,967.4 million reported in the previous quarter. Inventory amounted to $69.3 million compared with $81.6 million at the end of fourth-quarter fiscal 2022.
Capital expenditure in the quarter totaled $19 million compared with $12.5 million reported in the previous quarter.
2023 Guidance
For fiscal 2023, the company expects capital expenditure of $90-$100 million. General and administrative expenses are anticipated at $425-$435 million.
Zacks Rank & Key Picks
The company currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail-Wholesale sector are Arcos Dorados Holdings Inc. (ARCO - Free Report) , Chuy's Holdings, Inc. (CHUY - Free Report) , and Darden Restaurants, Inc. (DRI - Free Report) .
Arcos Dorados currently sports a Zacks Rank #1 (Strong Buy). ARCO has a long-term earnings growth rate of 7.8%. The stock has gained 6.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arcos Dorados’ 2024 sales and EPS suggests growth of 7.8% and 14.7%, respectively, from the year-ago period’s reported levels.
Chuy’s Holdings carries a Zacks Rank #2 (Buy). CHUY has a trailing four-quarter earnings surprise of 19.1%, on average. Shares of CHUY have increased 36.2% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings 2023 sales and EPS suggests growth of 10.8% and 19%, respectively, from the year-ago period’s reported levels.
Darden carries a Zacks Rank #2. DRI has a long-term earnings growth rate of 10.1%. The stock has improved 11.3% in the past year.
The Zacks Consensus Estimate for Darden’s 2024 sales and EPS suggests growth of 5.4% and 9.9%, respectively, from the year-ago period’s reported levels.