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Domino's Pizza, Inc. (DPZ - Free Report) reported mixed third-quarter fiscal 2024 results. While its earnings beat the Zacks Consensus Estimate, revenues missed the same. The top and the bottom lines increased from the prior-year quarter’s reported numbers.
Following the announcement, the company’s shares lost 2% in the pre-market trading session. Investor sentiment was negatively impacted by DPZ’s fiscal 2024 guidance, which reflects the challenges of the macroeconomic environment and their effect on current business trends globally.
Despite the challenges in the global market, Domino's third-quarter results highlight the success of its Hungry for MORE strategy. The company's focus on the Renowned Value pillar will be a key priority in the near term, positioning it as an industry leader. With various initiatives in place, Domino's remains confident about its ability to continue expanding its market share globally.
DPZ's Earnings & Revenue Discussion
In the quarter, Domino's reported adjusted earnings per share (EPS) of $4.19, which surpassed the Zacks Consensus Estimate of $3.71. The bottom line rose 0.2% from $4.18 reported in the year-ago quarter.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $1.08 billion missed the consensus mark of $1.1 billion. The top line increased 5.1% on a year-over-year basis. The upside can be attributed to higher revenues from the supply chain, courtesy of higher order volumes and an increase in the company's food basket pricing to stores. Strong contributions from U.S. franchise advertising and U.S. franchise royalties and fees added to the positives.
Domino's Pizza Inc Price, Consensus and EPS Surprise
In third-quarter fiscal 2024, Domino's had 208 gross store openings and 136 gross store closures.
Other Metrics
Global retail sales (excluding foreign currency impact) rose 5.1% on a year-over-year basis. The upside was driven by a 5.1% year-over-year increase in both international and U.S. store sales.
Comps at Domino’s domestic stores (including company-owned and franchise stores) rose 3% year over year. Our model predicted the metric to increase 4.2% from the year-ago levels.
At domestic company-owned stores, Domino’s comps rose 3.1% year over year compared with 2.9% a year ago. We estimated the metric to increase 2.9%.
Domestic franchise store comps jumped 3% year over year against a 0.7% decline reported in the prior-year quarter. Our model expected the metric to increase 4.3%.
Comps at international stores, excluding foreign currency translation, rose 0.8% year over year compared with 3.3% in the prior-year quarter.
Margins
In the fiscal third quarter, Domino’s gross margin expanded 40 basis points (bps) year over year to 39.2%. U.S. Company-owned store gross margin expanded 100 bps year over year to 16.8%. The upside was backed by sales leverage due to higher customer transaction counts.
Net income margin was 13.6%, down 80 bps from the year-ago quarter’s numbers. Our estimate was pegged at 11.4%.
Balance Sheet
As of Sept. 8, 2024, cash and cash equivalents totaled $189.1 million compared with $114.1 million as of Dec. 31, 2023. Long-term debt (less current portion) at the end of the fiscal third-quarter totaled $4.97 billion compared with $4.93 billion as of Dec. 31, 2023. Inventory amounted to $69.2 million compared with $83 million as of Dec. 31, 2023.
Capital expenditure at the end of the fiscal third quarter totaled $70.8 million, up from $59.3 million reported in the prior-year quarter.
During the reported quarter, the company repurchased and retired 443,302 shares for an aggregated cost of $190 million. As of Sept. 8, 2024, DPZ stated the availability of $926.3 million under its repurchase program.
Management declared a cash dividend of $1.51 per share. The dividend will be paid on Dec. 27, 2024, to shareholders of record as of Dec. 13, 2024.
Fiscal 2024 Guidance
The company expects around 6% annual global retail sales growth. For fiscal 2024, it anticipates global net store growth of 800 to 850. DPZ expects more than 8% annual income from operation growth.
Long-Term Guidance (2026-2028)
The company expects more than 7% annual global retail sales growth. DPZ expects over 8% annual income from operation growth.
DPZ’s Zacks Rank
Domino's currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Here are some better-ranked stocks from the Zacks Retail-Wholesale sector.
ANF has a trailing four-quarter earnings surprise of 28%, on average. The stock has surged 129.1% in the past year. The Zacks Consensus Estimate for ANF’s fiscal 2024 sales and earnings per share (EPS) indicates growth of 13% and 63.4%, respectively, from the year-ago period’s levels.
Boot Barn Holdings, Inc. (BOOT - Free Report) currently carries a Zacks Rank #2 (Buy). BOOT has a trailing four-quarter earnings surprise of 7.1%, on average. The stock has risen 99.3% in the past year.
The consensus estimate for BOOT’s fiscal 2025 sales and EPS indicates growth of 11.5% and 10.5%, respectively, from the year-ago period’s levels.
Sprouts Farmers Market, Inc. (SFM - Free Report) carries a Zacks Rank of 2 at present. SFM has a trailing four-quarter earnings surprise of 12%, on average. The stock has surged 161.6% in the past year.
The Zacks Consensus Estimate for SFM’s 2024 sales and EPS indicates a rise of 9.6% and 18.7%, respectively, from the year-ago period’s levels.
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Domino's Q3 Earnings Beat Estimates, Revenues Miss, Stock Falls
Domino's Pizza, Inc. (DPZ - Free Report) reported mixed third-quarter fiscal 2024 results. While its earnings beat the Zacks Consensus Estimate, revenues missed the same. The top and the bottom lines increased from the prior-year quarter’s reported numbers.
Following the announcement, the company’s shares lost 2% in the pre-market trading session. Investor sentiment was negatively impacted by DPZ’s fiscal 2024 guidance, which reflects the challenges of the macroeconomic environment and their effect on current business trends globally.
Despite the challenges in the global market, Domino's third-quarter results highlight the success of its Hungry for MORE strategy. The company's focus on the Renowned Value pillar will be a key priority in the near term, positioning it as an industry leader. With various initiatives in place, Domino's remains confident about its ability to continue expanding its market share globally.
DPZ's Earnings & Revenue Discussion
In the quarter, Domino's reported adjusted earnings per share (EPS) of $4.19, which surpassed the Zacks Consensus Estimate of $3.71. The bottom line rose 0.2% from $4.18 reported in the year-ago quarter.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $1.08 billion missed the consensus mark of $1.1 billion. The top line increased 5.1% on a year-over-year basis. The upside can be attributed to higher revenues from the supply chain, courtesy of higher order volumes and an increase in the company's food basket pricing to stores. Strong contributions from U.S. franchise advertising and U.S. franchise royalties and fees added to the positives.
Domino's Pizza Inc Price, Consensus and EPS Surprise
Domino's Pizza Inc price-consensus-eps-surprise-chart | Domino's Pizza Inc Quote
In third-quarter fiscal 2024, Domino's had 208 gross store openings and 136 gross store closures.
Other Metrics
Global retail sales (excluding foreign currency impact) rose 5.1% on a year-over-year basis. The upside was driven by a 5.1% year-over-year increase in both international and U.S. store sales.
Comps at Domino’s domestic stores (including company-owned and franchise stores) rose 3% year over year. Our model predicted the metric to increase 4.2% from the year-ago levels.
At domestic company-owned stores, Domino’s comps rose 3.1% year over year compared with 2.9% a year ago. We estimated the metric to increase 2.9%.
Domestic franchise store comps jumped 3% year over year against a 0.7% decline reported in the prior-year quarter. Our model expected the metric to increase 4.3%.
Comps at international stores, excluding foreign currency translation, rose 0.8% year over year compared with 3.3% in the prior-year quarter.
Margins
In the fiscal third quarter, Domino’s gross margin expanded 40 basis points (bps) year over year to 39.2%. U.S. Company-owned store gross margin expanded 100 bps year over year to 16.8%. The upside was backed by sales leverage due to higher customer transaction counts.
Net income margin was 13.6%, down 80 bps from the year-ago quarter’s numbers. Our estimate was pegged at 11.4%.
Balance Sheet
As of Sept. 8, 2024, cash and cash equivalents totaled $189.1 million compared with $114.1 million as of Dec. 31, 2023. Long-term debt (less current portion) at the end of the fiscal third-quarter totaled $4.97 billion compared with $4.93 billion as of Dec. 31, 2023. Inventory amounted to $69.2 million compared with $83 million as of Dec. 31, 2023.
Capital expenditure at the end of the fiscal third quarter totaled $70.8 million, up from $59.3 million reported in the prior-year quarter.
During the reported quarter, the company repurchased and retired 443,302 shares for an aggregated cost of $190 million. As of Sept. 8, 2024, DPZ stated the availability of $926.3 million under its repurchase program.
Management declared a cash dividend of $1.51 per share. The dividend will be paid on Dec. 27, 2024, to shareholders of record as of Dec. 13, 2024.
Fiscal 2024 Guidance
The company expects around 6% annual global retail sales growth. For fiscal 2024, it anticipates global net store growth of 800 to 850. DPZ expects more than 8% annual income from operation growth.
Long-Term Guidance (2026-2028)
The company expects more than 7% annual global retail sales growth. DPZ expects over 8% annual income from operation growth.
DPZ’s Zacks Rank
Domino's currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Here are some better-ranked stocks from the Zacks Retail-Wholesale sector.
Abercrombie & Fitch Co. (ANF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ANF has a trailing four-quarter earnings surprise of 28%, on average. The stock has surged 129.1% in the past year. The Zacks Consensus Estimate for ANF’s fiscal 2024 sales and earnings per share (EPS) indicates growth of 13% and 63.4%, respectively, from the year-ago period’s levels.
Boot Barn Holdings, Inc. (BOOT - Free Report) currently carries a Zacks Rank #2 (Buy). BOOT has a trailing four-quarter earnings surprise of 7.1%, on average. The stock has risen 99.3% in the past year.
The consensus estimate for BOOT’s fiscal 2025 sales and EPS indicates growth of 11.5% and 10.5%, respectively, from the year-ago period’s levels.
Sprouts Farmers Market, Inc. (SFM - Free Report) carries a Zacks Rank of 2 at present. SFM has a trailing four-quarter earnings surprise of 12%, on average. The stock has surged 161.6% in the past year.
The Zacks Consensus Estimate for SFM’s 2024 sales and EPS indicates a rise of 9.6% and 18.7%, respectively, from the year-ago period’s levels.