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Domino's (DPZ) Q2 Earnings Beat Estimates, Revenues Miss
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Domino's Pizza, Inc. (DPZ - Free Report) reported mixed second-quarter fiscal 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased from the prior-year quarter’s figure.
Following the announcement, the company’s shares declined 11.7% in the pre-market trading session. Investor sentiment was negatively impacted by the revenue miss and persistent challenges in store openings and closures. Consequently, DPZ lowered its global net store growth guidance for 2024.
Earnings & Revenue Discussion
In the quarter, Domino's reported adjusted earnings per share (EPS) of $4.03, surpassing the Zacks Consensus Estimate of $3.70. The figure rose 30.8% from $3.08 reported in the year-ago quarter.
Revenues of $1.09 billion missed the consensus mark of $1.1 billion. The top line increased 7.1% 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 second-quarter fiscal 2024, Domino's had 228 gross store openings and 53 gross store closures.
Other Metrics
Global retail sales (excluding foreign currency impact) rose 7.2% on a year-over-year basis in the fiscal second quarter. The upside was driven by higher international store sales (up 7.7% year over year) and U.S. store sales (6.8%).
For the fiscal second quarter, comps at Domino’s domestic stores (including company-owned and franchise stores) rose 4.8% year over year. Our model predicted the metric to increase 3.5% from the year-ago levels.
At domestic company-owned stores, Domino’s comps rose 4.5% year over year compared with 5.5% a year ago. We estimated the metric to increase 8%.
Domestic franchise store comps jumped 4.8% year over year against a 0.1% decline reported in the prior-year quarter. Our model suggested the metric to increase 3.3%.
Comps at international stores, excluding foreign currency translation, rose 2.1% year over year compared with 3.6% in the prior-year quarter.
Margins
In the fiscal second quarter, Domino’s gross margin expanded 30 basis points (bps) year over year to 39.8%. U.S. Company-owned store gross margin contracted 100 bp year over year to 17.6%. Higher insurance costs and increased labor costs primarily caused the downside. However, this was partially offset by sales leverage due to higher customer transaction counts.
Net income margin was 12.9%, up 220 bps from the year-ago quarter’s tally. Our estimate was pegged at 11.7%.
Balance Sheet
As of Jun 16, 2024, cash and cash equivalents totaled $283.7 million compared with $114.1 million as of Dec 31, 2023. Long-term debt (less current portion) at the fiscal second-quarter end was $4.97 billion compared with $4.93 billion at the end of Dec 31, 2023. Inventory amounted to $69.3 million compared with $83 million at the end of Dec 31, 2023.
Capital expenditure in the quarter totaled $43.7 million compared with $38 million reported in the prior year quarter.
During the fiscal second quarter, the company repurchased and retired 56,372 shares for an aggregated cost of $25 million. As of Jun 16, 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 Sep 30, 2024, to shareholders of record as of Sep 13, 2024.
Long-Term Guidance (2024-2028)
The company expects more than 7% annual global retail sales growth. It anticipates more than 2024 global net store growth of 825 to 925 down from the previous estimate of 1100 stores. DPZ expects more than 8% annual income from operation growth.
Zacks Rank & Key Picks
Domino's currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for BJRI’s 2024 sales and EPS indicates a rise of 1% and 65.9%, respectively, from the year-ago period’s levels.
El Pollo Loco Holdings, Inc. (LOCO - Free Report) sports a Zacks Rank #1. LOCO has a trailing four-quarter earnings surprise of 19.4%, on average. The stock has moved up 16% in the past year.
The Zacks Consensus Estimate for LOCO’s 2025 sales and EPS suggests growth of 3.8% and 9.9%, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) currently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 213.4%, on average. EAT’s shares have surged 67.8% in the past year.
The Zacks Consensus Estimate for EAT’s 2024 sales and EPS indicates 5.3% and 43.1% growth, respectively, from year-earlier actuals.
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Domino's (DPZ) Q2 Earnings Beat Estimates, Revenues Miss
Domino's Pizza, Inc. (DPZ - Free Report) reported mixed second-quarter fiscal 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased from the prior-year quarter’s figure.
Following the announcement, the company’s shares declined 11.7% in the pre-market trading session. Investor sentiment was negatively impacted by the revenue miss and persistent challenges in store openings and closures. Consequently, DPZ lowered its global net store growth guidance for 2024.
Earnings & Revenue Discussion
In the quarter, Domino's reported adjusted earnings per share (EPS) of $4.03, surpassing the Zacks Consensus Estimate of $3.70. The figure rose 30.8% from $3.08 reported in the year-ago quarter.
Revenues of $1.09 billion missed the consensus mark of $1.1 billion. The top line increased 7.1% 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 second-quarter fiscal 2024, Domino's had 228 gross store openings and 53 gross store closures.
Other Metrics
Global retail sales (excluding foreign currency impact) rose 7.2% on a year-over-year basis in the fiscal second quarter. The upside was driven by higher international store sales (up 7.7% year over year) and U.S. store sales (6.8%).
For the fiscal second quarter, comps at Domino’s domestic stores (including company-owned and franchise stores) rose 4.8% year over year. Our model predicted the metric to increase 3.5% from the year-ago levels.
At domestic company-owned stores, Domino’s comps rose 4.5% year over year compared with 5.5% a year ago. We estimated the metric to increase 8%.
Domestic franchise store comps jumped 4.8% year over year against a 0.1% decline reported in the prior-year quarter. Our model suggested the metric to increase 3.3%.
Comps at international stores, excluding foreign currency translation, rose 2.1% year over year compared with 3.6% in the prior-year quarter.
Margins
In the fiscal second quarter, Domino’s gross margin expanded 30 basis points (bps) year over year to 39.8%. U.S. Company-owned store gross margin contracted 100 bp year over year to 17.6%. Higher insurance costs and increased labor costs primarily caused the downside. However, this was partially offset by sales leverage due to higher customer transaction counts.
Net income margin was 12.9%, up 220 bps from the year-ago quarter’s tally. Our estimate was pegged at 11.7%.
Balance Sheet
As of Jun 16, 2024, cash and cash equivalents totaled $283.7 million compared with $114.1 million as of Dec 31, 2023. Long-term debt (less current portion) at the fiscal second-quarter end was $4.97 billion compared with $4.93 billion at the end of Dec 31, 2023. Inventory amounted to $69.3 million compared with $83 million at the end of Dec 31, 2023.
Capital expenditure in the quarter totaled $43.7 million compared with $38 million reported in the prior year quarter.
During the fiscal second quarter, the company repurchased and retired 56,372 shares for an aggregated cost of $25 million. As of Jun 16, 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 Sep 30, 2024, to shareholders of record as of Sep 13, 2024.
Long-Term Guidance (2024-2028)
The company expects more than 7% annual global retail sales growth. It anticipates more than 2024 global net store growth of 825 to 925 down from the previous estimate of 1100 stores. 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:
BJ's Restaurants, Inc. (BJRI - Free Report) sports a Zacks Rank #1 (Strong Buy). BJRI has a long-term earnings growth rate of 14%. Shares of BJRI have gained 4.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BJRI’s 2024 sales and EPS indicates a rise of 1% and 65.9%, respectively, from the year-ago period’s levels.
El Pollo Loco Holdings, Inc. (LOCO - Free Report) sports a Zacks Rank #1. LOCO has a trailing four-quarter earnings surprise of 19.4%, on average. The stock has moved up 16% in the past year.
The Zacks Consensus Estimate for LOCO’s 2025 sales and EPS suggests growth of 3.8% and 9.9%, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) currently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 213.4%, on average. EAT’s shares have surged 67.8% in the past year.
The Zacks Consensus Estimate for EAT’s 2024 sales and EPS indicates 5.3% and 43.1% growth, respectively, from year-earlier actuals.