Domino’s Pizza, Inc. DPZ reported mixed first-quarter fiscal 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased from the prior-year quarter’s figure. Following the announcement, the company’s shares inched up 5.2% in the pre-market trading session.
During the quarter, the company reported benefits from the Hungry for MORE strategy, registering heightened sales, expanding store presence and increasing profits. It reported solid growth in the United States, backed by positive order counts in carryout and delivery segments. The updated Domino’s Rewards loyalty program also contributed positively.
DPZ underscores its marketing efforts on Uber Eats, with a goal of reaching 3% or more of sales through this platform by the 2024-end. The company remains committed to improving franchisee profitability and expanding its store network to drive growth.
Earnings & Revenue Discussion
In the quarter, Domino’s reported adjusted earnings per share (EPS) of $3.58, surpassing the Zacks Consensus Estimate of $3.37. The figure rose 22.2% from $2.93 reported in the year-ago quarter.
Revenues of $1.08 billion beat the consensus mark by 0.5%. The top line increased 5.9% on a year-over-year basis. The upside can be attributed to higher revenues from the supply chain and U.S. franchise royalties and fees, along with increased revenues from U.S. company-owned stores.
Domino’s Pizza Inc Price, Consensus and EPS Surprise
Domino’s Pizza Inc price-consensus-eps-surprise-chart | Domino’s Pizza Inc Quote
In first-quarter fiscal 2024, Domino’s had 203 gross store openings and 39 gross store closures.
Other Metrics
Global retail sales (excluding foreign currency impact) rose 7.3% on a year-over-year basis in the fiscal first quarter. The upside was driven by higher international store sales (up 6.8% year over year) and U.S. store sales (7.8%).
For the fiscal first quarter, comps at Domino’s domestic stores (including company-owned and franchise stores) rose 5.6% year over year. Our model predicted the metric to increase 3.6% from the year-ago levels.
At domestic company-owned stores, Domino’s comps gained 8.5% year over year compared with 7.3% a year ago. We estimated the metric to increase 7.3%.
Domestic franchise store comps jumped 5.5% year over year compared with 3.4% in the prior-year quarter. Our model suggested the metric to increase 3.4%.
Comps at international stores, excluding foreign currency translation, improved 0.9% year over year compared with 1.2% in the prior-year quarter.
Margins
In the fiscal first quarter, Domino’s gross margin expanded 130 basis points (bps) year over year to 38.9%.
Net income margin was 11.6%, up 140 bps from the year-ago quarter. Our estimate was pegged at 11.1%.
Balance Sheet
As of Mar 24, 2024, cash and cash equivalents totaled $203.9 million compared with $114.1 million as of Dec 31, 2023. Long-term debt (less current portion) at the fiscal first-quarter end was $4.97 billion compared with $4.93 billion at the end of Dec 31, 2023. Inventory amounted to $761 million compared with $83 million at the end of Dec 31, 2023.
Capital expenditure in the quarter totaled $20.2 million compared with $19 million reported in the prior year quarter.
During the fiscal first quarter, the company repurchased and retired 56,372 shares for an aggregated cost of $25 million. As of Mar 24, 2024, DPZ stated the availability of $1.12 billion under its repurchase program.
Management declared a cash dividend of $1.51 per share. The dividend will be paid on Jun 28, 2024, to shareholders of record as of Jun 14, 2024.
Long-Term Guidance (2024-2028)
The company expects more than 7% annual global retail sales growth. It anticipates more than 1,100 annual global net store growth. DPZ expects more than 8% annual income from operation growth.
Zacks Rank & Key Picks
Domino’s currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail – Restaurants industry include:
Dine Brands Global, Inc. DIN carries a Zacks Rank #2 (Buy). DIN has a trailing four-quarter earnings surprise of 17.6%, on average. DIN’s shares have declined 9% year to date. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for DIN’s 2025 sales and EPS indicates a rise of 1.7% and 4.7%, respectively, from the year-ago period’s levels.
Wingstop Inc. WING carries a Zacks Rank #2. WING has a trailing four-quarter earnings surprise of 21.3% on average. The stock has gained 49.1% year to date.
The Zacks Consensus Estimate for WING’s 2025 sales and EPS suggests growth of 15.9% and 21.8%, respectively, from the year-ago period’s levels.
Yum China Holdings, Inc. YUMC carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 40.7%, on average. Shares of YUMC have fallen 6.5% year to date.
The Zacks Consensus Estimate for YUMC’s 2025 sales and EPS suggests growth of 11% and 16.2%, respectively, from the year-ago period’s levels.
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