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Domino's Pizza (DPZ) Down 4.4% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Domino's Pizza (DPZ - Free Report) . Shares have lost about 4.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Domino's Pizza due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Domino's Q2 Earnings Beat Estimates, Revenues Lag
Domino's reported mixed second-quarter fiscal 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top line fell year over year, while the bottom line increased from the prior-year quarter’s figure.
Earnings & Revenue Discussion
In the quarter, Domino's reported adjusted earnings per share of $3.08, beating the Zacks Consensus Estimate of $3.04. The figure increased 9.2% from $2.82 reported in the prior-year quarter.
Revenues of $1,024.6 million missed the consensus mark of $1,065 million. Moreover, the top line declined 3.8% on a year-over-year basis. The downside can be attributed to lower supply-chain revenues (owing to a decline in market basket pricing) and lower order volumes. Also, the refranchising of 114 U.S. company-owned stores in Arizona and Utah added to the downside.
In second-quarter fiscal 2023, Domino's opened 197 stores, comprising 27 net new U.S. stores and 170 net new international stores.
Comps
Global retail sales (including total franchise and company-owned units) rose 4.3% on a year-over-year basis in the fiscal second quarter. The upside was driven by higher international store sales (up 6.9% year over year). Meanwhile, U.S. store sales increased 1.7% year over year. Excluding foreign-currency impacts, global retail sales increased 5.8% from the prior-year quarter’s levels.
For the fiscal second quarter, comps at Domino’s domestic stores (including company-owned and franchise stores) increased 0.1% from the year-ago quarter’s reading.
At domestic company-owned stores, Domino’s comps increased 5.5% year over year against a decline of 9.2% reported in the year-ago quarter.
Domestic franchise store comps fell 0.1% year over year compared with a decline of 2.5% reported in the prior-year quarter.
Comps at international stores, excluding foreign currency translation, increased 3.6% year over year against a decline of 2.2% reported in the prior-year quarter.
Margins
In the fiscal second quarter, Domino’s’ gross margin expanded 320 basis points (bps) year over year to 39.5%. The net income margin was 10.7%, up 110 bps from the year-ago quarter.
Balance Sheet
As of Jun 18, cash and cash equivalents totaled $77 million compared with $154.2 million as of Mar 26. At the end of second-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.
The long-term debt (less current portion) at the fiscal second-quarter end was $4,944.7 million compared with $4,955.2 million reported in the previous quarter. Inventory amounted to $65.6 million compared with $69.3 million at the end of first-quarter fiscal 2023.
Capital expenditure in the quarter totaled $38 million compared with $19 million reported in the previous quarter.
During the fiscal second quarter, the company repurchased and retired 292,030 shares for an aggregate cost of $90.8 million. As of Jun 18, 2023, the company stated the availability of $289.5 million under its repurchase program.
The company declared a cash dividend of $1.21 per share. The dividend will be paid out on Sep 29, 2023, to shareholders on record as of Sep 15, 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Domino's Pizza has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Domino's Pizza has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Domino's Pizza (DPZ) Down 4.4% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Domino's Pizza (DPZ - Free Report) . Shares have lost about 4.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Domino's Pizza due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Domino's Q2 Earnings Beat Estimates, Revenues Lag
Domino's reported mixed second-quarter fiscal 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top line fell year over year, while the bottom line increased from the prior-year quarter’s figure.
Earnings & Revenue Discussion
In the quarter, Domino's reported adjusted earnings per share of $3.08, beating the Zacks Consensus Estimate of $3.04. The figure increased 9.2% from $2.82 reported in the prior-year quarter.
Revenues of $1,024.6 million missed the consensus mark of $1,065 million. Moreover, the top line declined 3.8% on a year-over-year basis. The downside can be attributed to lower supply-chain revenues (owing to a decline in market basket pricing) and lower order volumes. Also, the refranchising of 114 U.S. company-owned stores in Arizona and Utah added to the downside.
In second-quarter fiscal 2023, Domino's opened 197 stores, comprising 27 net new U.S. stores and 170 net new international stores.
Comps
Global retail sales (including total franchise and company-owned units) rose 4.3% on a year-over-year basis in the fiscal second quarter. The upside was driven by higher international store sales (up 6.9% year over year). Meanwhile, U.S. store sales increased 1.7% year over year. Excluding foreign-currency impacts, global retail sales increased 5.8% from the prior-year quarter’s levels.
For the fiscal second quarter, comps at Domino’s domestic stores (including company-owned and franchise stores) increased 0.1% from the year-ago quarter’s reading.
At domestic company-owned stores, Domino’s comps increased 5.5% year over year against a decline of 9.2% reported in the year-ago quarter.
Domestic franchise store comps fell 0.1% year over year compared with a decline of 2.5% reported in the prior-year quarter.
Comps at international stores, excluding foreign currency translation, increased 3.6% year over year against a decline of 2.2% reported in the prior-year quarter.
Margins
In the fiscal second quarter, Domino’s’ gross margin expanded 320 basis points (bps) year over year to 39.5%. The net income margin was 10.7%, up 110 bps from the year-ago quarter.
Balance Sheet
As of Jun 18, cash and cash equivalents totaled $77 million compared with $154.2 million as of Mar 26. At the end of second-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.
The long-term debt (less current portion) at the fiscal second-quarter end was $4,944.7 million compared with $4,955.2 million reported in the previous quarter. Inventory amounted to $65.6 million compared with $69.3 million at the end of first-quarter fiscal 2023.
Capital expenditure in the quarter totaled $38 million compared with $19 million reported in the previous quarter.
During the fiscal second quarter, the company repurchased and retired 292,030 shares for an aggregate cost of $90.8 million. As of Jun 18, 2023, the company stated the availability of $289.5 million under its repurchase program.
The company declared a cash dividend of $1.21 per share. The dividend will be paid out on Sep 29, 2023, to shareholders on record as of Sep 15, 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Domino's Pizza has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Domino's Pizza has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.