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Category: Stock Market and Domino's Pizza's (DPZ)
Date: 16 July 2020 Stock Price of Domino's: $407.48 We take a look at the 2nd quarter earnings report of their 2020 fiscal year of Domino's Pizza one of the world's leading pizza delivery companies with over 16 300 stores. Revenues for the 2nd quarter 2020 came in at $920.023 up 13% compared to a year ago.
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Our focus as a global brand and the commitment of our local operators remains steadfast on serving our customers and our communities with a convenient, affordable and safe food and service experience -Ritch Allison, Domino's Chief Executive Officer"
About Domino's Pizza
Founded in 1960, Domino’s Pizza is the largest pizza company in the world based on retail sales, with a significant business in both delivery and carryout pizza. It ranks among the world’s top public restaurant brands with a global enterprise of more than 16,300 stores in over 85 markets. Domino’s had global retail sales of over $13.5 billion in 2018, with nearly $6.6 billion in the U.S. and more than $6.9 billion internationally. In the second quarter of 2019, Domino’s had global retail sales of over $3.2 billion, with over $1.6 billion in the U.S. and over $1.6 billion internationally. Its system is comprised of independent franchise owners who accounted for 98% of Domino's stores as of the second quarter of 2019. Emphasis on technology innovation helped Domino’s achieve more than half of all global retail sales in 2018 from digital channels.
In the U.S., Domino’s generates over 65% of sales via digital channels and has developed several innovative ordering platforms, including Google Home, Facebook Messenger, Apple Watch, Amazon Echo and Twitter – as well as Domino’s HotSpots®, an ordering platform featuring over 200,000 unique, non-traditional delivery locations. In late 2017, Domino’s began an industry-first test of self-driving vehicle delivery, and in June 2019 announced a partnership with Nuro, furthering its exploration and testing of autonomous pizza delivery.
Quick facts about Domino's Pizza
Quick facts about Domino's Pizza
- Domino's Pizza is listed on the New York Stock Exchange under share code ticker: DPZ
- Domino's Pizza market capital: $14.8 billion (as at 12 June 2020)
- Number of employees of Domino's: 13 100
- Number of stores in the USA: 6 126
- Revenues in 2019: $3.62 billion
- Earnings per share in 2019: $9.56
- Shares in issue: 40.776 million
- Dividends paid during 2019: $2.60
- Cash on balance sheet: $190.6 million
Overview of Domino's Pizza's 2nd quarter 2020 earnings report
- Total Revenues: $920.023 million (up from $811.647 million for the same quarter of the previous year)
- Total Revenues increased by 13.3% over the last 12 months
- Cost of sales: $562.923 million (up from $494.976 million for the same quarter of the previous year)
- Cost of sales increased by 13.7% over the last 12 months
- Net income: $188.668 million (up 104% from $92.359 million for the same quarter of the previous year)
- Diluted earnings per share: $2.99 (up from $2.19 for the same quarter of the previous year)
- PE ratio: 34
- Dividend declared: $0.78
- Dividend yield: 0.76%
- Diluted weighted-average shares outstanding: 39.746 million (down from 42.236 million for the same quarter of the previous year)
- Cash and cash equivalents: $247.952 million
- Cash and cash equivalents per share: $6.23
- Cash and cash equivalents makes up 1.53% of Domino's market capital
- Cash and cash equivalents makes up 15.7% of Domino's total assets
- Accounts receivable: $232.114 million
- Accounts receivable makes up 14.7% of Domino's total assets
- Cash generated from operations for the first 2 quarter of 2020: $211.828 million
- Cash generated from operations per share for first 2 quarters of 2020: $5.32
Domino's management commentary on their 2nd quarter 2020 earnings
ANN ARBOR, Mich., July 16, 2020 /PRNewswire/ -- Domino's Pizza, Inc. (NYSE: DPZ), the largest pizza company in the world based on global retail sales, announced results for the second quarter. Global retail sales increased 5.7% in the second quarter, or 8.1% excluding foreign currency impact. Global retail sales in the second quarter were positively impacted by U.S. same store sales, but were negatively impacted by temporary store closures in certain international markets. U.S. same store sales grew 16.1% during the quarter versus the year-ago period and were positively impacted by customer ordering behavior during the COVID-19 pandemic, continuing the positive sales momentum in the Company's U.S. stores business. The international business also posted positive same store sales results, with growth of 1.3% during the quarter. The second quarter marked the 106th consecutive quarter of international same store sales growth and the 37th consecutive quarter of U.S. same store sales growth.
The Company had second quarter net store growth of 84 stores, comprised of 39 net new U.S. stores and 45 net new international stores. The number of temporary store closures in certain of the Company's international markets has declined from its peak of approximately 2,400 temporary closures. Based on information reported to the Company by its master franchisees, the Company estimates that as of July 8, 2020, there were fewer than 600 international stores temporarily closed. Diluted EPS for the second quarter was $2.99, up 36.5% over the prior year quarter.
On July 15, 2020, the Company's Board of Directors declared a $0.78 per share quarterly dividend for shareholders of record as of September 15, 2020 to be paid on September 30, 2020. "Our focus as a global brand and the commitment of our local operators remains steadfast on serving our customers and our communities with a convenient, affordable and safe food and service experience," said Ritch Allison, Domino's Chief Executive Officer. "I have never been more proud of our system of franchisees, operators and corporate team members for their continued passion and innovative spirit, which was evident during the second quarter."
The Company had second quarter net store growth of 84 stores, comprised of 39 net new U.S. stores and 45 net new international stores. The number of temporary store closures in certain of the Company's international markets has declined from its peak of approximately 2,400 temporary closures. Based on information reported to the Company by its master franchisees, the Company estimates that as of July 8, 2020, there were fewer than 600 international stores temporarily closed. Diluted EPS for the second quarter was $2.99, up 36.5% over the prior year quarter.
On July 15, 2020, the Company's Board of Directors declared a $0.78 per share quarterly dividend for shareholders of record as of September 15, 2020 to be paid on September 30, 2020. "Our focus as a global brand and the commitment of our local operators remains steadfast on serving our customers and our communities with a convenient, affordable and safe food and service experience," said Ritch Allison, Domino's Chief Executive Officer. "I have never been more proud of our system of franchisees, operators and corporate team members for their continued passion and innovative spirit, which was evident during the second quarter."
Investment in Dash Brands Ltd.
During the second quarter of 2020, a subsidiary of the Company acquired a non-controlling interest in Dash Brands Ltd., for $40.0 million. Dash Brands Ltd. is a privately-held company that, through its subsidiaries, serves as the Company's master franchisee in China that owns and operates Domino's Pizza stores in that market. The Company is contractually required to invest an additional $40.0 million in Dash Brands Ltd. in the first quarter of 2021, assuming certain performance conditions are satisfied. If such performance conditions are not satisfied, the Company has the option to make such investment in its discretion.
Liquidity and Use of Cash Update
As of June 14, 2020, the Company had approximately:
As previously disclosed, given the market uncertainty arising from COVID-19, the Company took a precautionary measure and borrowed $158.0 million under its variable funding notes during the second quarter of 2020. The Company repaid $100.0 million of these borrowings during the second quarter of 2020. Subsequent to the second quarter of 2020, the Company repaid an additional $15.0 million under its variable funding notes, and as of July 8, 2020, the Company had $117.0 million of available borrowings under its $200.0 million variable funding notes, net of letters of credit issued of $40.0 million and borrowings outstanding of $43.0 million.
During the second quarter of 2020, a subsidiary of the Company acquired a non-controlling interest in Dash Brands Ltd., for $40.0 million. Dash Brands Ltd. is a privately-held company that, through its subsidiaries, serves as the Company's master franchisee in China that owns and operates Domino's Pizza stores in that market. The Company is contractually required to invest an additional $40.0 million in Dash Brands Ltd. in the first quarter of 2021, assuming certain performance conditions are satisfied. If such performance conditions are not satisfied, the Company has the option to make such investment in its discretion.
Liquidity and Use of Cash Update
As of June 14, 2020, the Company had approximately:
- $248.0 million of unrestricted cash and cash equivalents;
- $4.17 billion in total debt; and
- $102.0 million of available borrowings under its $200.0 million variable funding notes, net of letters of credit issued of $40.0 million and borrowings outstanding of $58.0 million.
As previously disclosed, given the market uncertainty arising from COVID-19, the Company took a precautionary measure and borrowed $158.0 million under its variable funding notes during the second quarter of 2020. The Company repaid $100.0 million of these borrowings during the second quarter of 2020. Subsequent to the second quarter of 2020, the Company repaid an additional $15.0 million under its variable funding notes, and as of July 8, 2020, the Company had $117.0 million of available borrowings under its $200.0 million variable funding notes, net of letters of credit issued of $40.0 million and borrowings outstanding of $43.0 million.
Domino's Pizza (NYSE: DPZ) stock price history
The image below, obtained from Google, shows the stock price history of Domino's Pizza over the last 5 years. And it's been a very good time for Domino's stockholders.5 years ago the stock was trading at around $110 a stock and its currently trading at $407.48 a stock. That's a very strong return of 270% provided to Domino's stockholders over the last 5 years.
The stock of Domino's is however trading at a lot closer to its 52 week high of $422.15 than it is to its 52 week low of $220.90 which to us is a clear indication that the short term sentiment and momentum of Domino's stock is very positive at this point in time.
The stock of Domino's is however trading at a lot closer to its 52 week high of $422.15 than it is to its 52 week low of $220.90 which to us is a clear indication that the short term sentiment and momentum of Domino's stock is very positive at this point in time.
Domino's Pizza (DPZ) stock vs Yum! Brands (YUM) stock
So you might be wondering why we comparing the stock price of Domino's Pizza to that of Yum! Brands (YUM)? Well Yum owns Domino's Pizza rival, Pizza Hut. And there are many comparisons between Domino's Pizza and Papa Johns so we decided to take the route less traveled. Over the last 3 years the stock of Domino's Pizza increased by 118.5% while the stock of Yum Brands (YUM) increased by 18% over the same time period
Recent coverage of Domino's Pizza
The extract below discusses Domino's upcoming earnings release as obtained from Investopedia.com
Pizza stocks have lifted to new highs, completing historic turnarounds following the first quarter's pandemic swoon. Big players got pummeled at the start of the shutdown, dropping Domino's Pizza Inc. (DPZ) about 28% and rival Papa John's International, Inc. (PZZA) a stomach-churning 58%. Sales data then revealed that Americans stuck at home were eating more tomato pies than at any time in pizza history, triggering vertical rally waves that carved V-shaped patterns back to prior highs.
These issues are better positioned than other restaurant stocks to take advantage of roped-off dine-in sections because pizza has been hand-delivered to customers for more than 130 years. That's when Naples chef Raffaele Esposito was asked to deliver food to King Umberto I and Queen Margherita, who were visiting the city, and she got sick after eating spoiled food. Raffaele personally delivered his latest recipe, which became known as the classic margherita pie.
Competition marks the group's biggest challenge, with public chains competing with thousands of smaller operations. This places mom-and-pop outlets at a disadvantage because they're forced to book sales by listing with competitors at a big delivery hub like Uber Technologies, Inc.'s (UBER) UberEats and Grubhub Inc. (GRUB). Big companies can bypass these middlemen if they choose, building their own delivery fleets and web portals, allowing them to keep down costs and keep a bigger portion of each sale.
Read the full article here
Pizza stocks have lifted to new highs, completing historic turnarounds following the first quarter's pandemic swoon. Big players got pummeled at the start of the shutdown, dropping Domino's Pizza Inc. (DPZ) about 28% and rival Papa John's International, Inc. (PZZA) a stomach-churning 58%. Sales data then revealed that Americans stuck at home were eating more tomato pies than at any time in pizza history, triggering vertical rally waves that carved V-shaped patterns back to prior highs.
These issues are better positioned than other restaurant stocks to take advantage of roped-off dine-in sections because pizza has been hand-delivered to customers for more than 130 years. That's when Naples chef Raffaele Esposito was asked to deliver food to King Umberto I and Queen Margherita, who were visiting the city, and she got sick after eating spoiled food. Raffaele personally delivered his latest recipe, which became known as the classic margherita pie.
Competition marks the group's biggest challenge, with public chains competing with thousands of smaller operations. This places mom-and-pop outlets at a disadvantage because they're forced to book sales by listing with competitors at a big delivery hub like Uber Technologies, Inc.'s (UBER) UberEats and Grubhub Inc. (GRUB). Big companies can bypass these middlemen if they choose, building their own delivery fleets and web portals, allowing them to keep down costs and keep a bigger portion of each sale.
Read the full article here
Domino's (NYSE: DPZ) latest stock valuation
So what is Domino's Pizza (NYSE: DPZ) stock worth based on the release of their 2nd quarter 2020 earnings report? Based on Domino's Pizza's 2nd quarter 2020 earnings report our valuation model provides a target price (full value price) at $209.40 a stock. We therefore believe that the stock is overvalued.
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target price (full value price) which in this case is $209.40. Thus we see a good entry point into Domino's stock at $188.50 or below. We believe that Domino's stock will pull back in coming weeks and months to levels closer to our target price (full value price).
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target price (full value price) which in this case is $209.40. Thus we see a good entry point into Domino's stock at $188.50 or below. We believe that Domino's stock will pull back in coming weeks and months to levels closer to our target price (full value price).
Next earnings release of Domino's Pizza
It is expected that Domino's Pizza will release their 3rd quarter 2020 earnings report in late October 2020