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Domino's (DPZ) Q3 Earnings Preview: What's in the Cards for the Pizza Giant?

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Domino’s (DPZ - Free Report) is set to report its third quarter performance before the opening bell on Tuesday, October 8. The pizza giant is looking to impress investors and hopes Q3 will be a catalyst, with its shares down roughly 1% in 2019.

Investors are worried about Dominos’ growth coming to a halt, as comp sales have trended lower over the past few quarters. Will Domino’s post a strong third quarter that can finally catapult DPZ shares out of their slump?

Overview and Q2 Recap

Domino’s boasts over 15,900 locations in more than 85 markets. In Q2, Domino's notched its 33rd consecutive quarter of growth in the core U.S. market and the 102nd straight quarter of gains internationally. The company’s continued expansion in the second quarter outperformed Papa John’s (PZZA - Free Report) whose comp sales fell 6.8% in its last reported quarter.

In Q2, Domino’s reported US same-store sales growth of 3.0% and international same-store sales growth of 2.4%. The pizza company reported total revenue of $811.6 million for a 4.14% gain, while earnings came in at $2.19 per share for a 23% jump. Earnings beat our estimates by 9.5% and revenue missed our estimate by 2.59%. US company-owned stores brought in $105 million for a 11.6% drop. Luckily, its supply chain segment jumped 6.05% to $467.58 million. The company’s supply chain segment involves the operation of 19 regional dough manufacturing centers and food supply chain centers in the United States.

The main issue investors had with Dominos’ second-quarter performance was with its decelerating comp sales. As previously mentioned, US stores comp sales popped 3% but were down from the 6.9% gain in Q2 2018. And International stores climbed 2.4% but lagged behind the 4% gain made a year ago.

Company Outlook

Our Zacks consensus estimates call for Domino’s to see a 5.13% hike in earnings to $2.05 per share and for sales to come in at $819.4 million for a 4.25% gain. US company owned stores are projected to slip 14.4% to $101.45 million. Supply chain is forecasted to bring in $478.21 million for a 7.44% climb.

US stores comp sales are estimated to pop 2.7%, which would be below the 6.3% gain made in Q3 2018. US franchise same store sales are forecasted to grow 2.87% and lag behind the 6.4% gain made in the year-ago period.

Full-year Fiscal 2019 estimates call for Dominos’ bottom line to grow 11.76% to $9.41 per share and for its top line to see a 5% jump to $3.6 billion.

Domino’s is likely to continue pushing ahead with its aggressive store expansion plans as it works to rejuvenate its comp sales through menu additions and new features to its mobile ordering platform. Domino’s sits at a Zacks Rank #3 (Hold) with a Style Score of A in Growth.

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