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Domino's (DPZ) Q2 Earnings Beat Estimates, Revenues Lag
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Domino's Pizza, Inc. (DPZ - Free Report) 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. Following the announcement, shares of the company inched up 1.6% in the pre-market trading session.
Earnings & Revenue Discussion
In the quarter, Domino's reported adjusted earnings per share (EPS) 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.
Domino's Pizza Inc Price, Consensus and EPS Surprise
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. Our estimate for the metric was 7.3%.
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%. Our estimate for gross margin was 36.7%.
The net income margin was 10.7%, up 110 bps from the year-ago quarter. Our estimate for net income margin was 9.9%.
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.
Zacks Rank & Key Picks
Domino's currently carries a Zacks Rank #3 (Hold).
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) sports a Zacks Rank #1 (Strong Buy). PLAY has a trailing four-quarter earnings surprise of 6.8%, on average. Shares of PLAY have gained 33.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for PLAY’s 2024 sales and EPS indicates a rise of 17% and 29%, respectively, from the year-ago period’s levels.
BJ's Restaurants, Inc. (BJRI - Free Report) sports a Zacks Rank #1. BJRI has a long-term earnings growth rate of 15%. The stock has rallied 51.2% in the past year.
The Zacks Consensus Estimate for BJ's Restaurants’ 2023 sales and EPS suggests growth of 5.5% and 329.4%, respectively, from the year-ago period’s levels.
Chuy's Holdings, Inc. (CHUY - Free Report) carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 23.4%, on average. Shares of CHUY have skyrocketed 88% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings’ 2023 sales and EPS suggests growth of 9.9% and 27.7%, respectively, from the year-ago period’s levels.
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Domino's (DPZ) Q2 Earnings Beat Estimates, Revenues Lag
Domino's Pizza, Inc. (DPZ - Free Report) 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. Following the announcement, shares of the company inched up 1.6% in the pre-market trading session.
Earnings & Revenue Discussion
In the quarter, Domino's reported adjusted earnings per share (EPS) 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.
Domino's Pizza Inc Price, Consensus and EPS Surprise
Domino's Pizza Inc price-consensus-eps-surprise-chart | Domino's Pizza Inc Quote
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. Our estimate for the metric was 7.3%.
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%. Our estimate for gross margin was 36.7%.
The net income margin was 10.7%, up 110 bps from the year-ago quarter. Our estimate for net income margin was 9.9%.
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.
Zacks Rank & Key Picks
Domino's currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail – Restaurants industry include:
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) sports a Zacks Rank #1 (Strong Buy). PLAY has a trailing four-quarter earnings surprise of 6.8%, on average. Shares of PLAY have gained 33.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for PLAY’s 2024 sales and EPS indicates a rise of 17% and 29%, respectively, from the year-ago period’s levels.
BJ's Restaurants, Inc. (BJRI - Free Report) sports a Zacks Rank #1. BJRI has a long-term earnings growth rate of 15%. The stock has rallied 51.2% in the past year.
The Zacks Consensus Estimate for BJ's Restaurants’ 2023 sales and EPS suggests growth of 5.5% and 329.4%, respectively, from the year-ago period’s levels.
Chuy's Holdings, Inc. (CHUY - Free Report) carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 23.4%, on average. Shares of CHUY have skyrocketed 88% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings’ 2023 sales and EPS suggests growth of 9.9% and 27.7%, respectively, from the year-ago period’s levels.