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Category: Stock Market and Dominos Pizza's
Date: 6 October 2019 Stock Price: $242.13 We take a look at the 2nd quarter earnings report of their 2019 fiscal year of Domino's Pizza one of the world's leading pizza delivery companies with over 16 300 stores.
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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.
Overview of Domino's Pizza's latest earnings report
- Total Revenues: $811.647 million (up from $799.396 million for the same quarter of the previous year)
- Total Revenues increased by 1.53% over the last 12 months
- Cost of sales: $494.976 million (up from $485.816 million for the same quarter of the previous year)
- Cost of sales increased by .88% over the last 12 months
- Net income: $92.359 million (up from $77.408 million for the same quarter of the previous year)
- Diluted earnings per share: $2.19 (up from $1.78 for the same quarter of the previous year)
- PE ratio: 27.65
- Dividend declared: $0.65
- Dividend yield: 1.07%
- Diluted weighted-average shares outstanding: 42.236 million (down from 43.582 million for the same quarter of the previous year)
- Cash and cash equivalents: $108.259 million
- Cash and cash equivalents per share: $2.56
- Cash and cash equivalents makes up 1.05% of Domino's market capital
- Cash and cash equivalents makes up 9.19% of Domino's total assets
- Accounts receivable: $182.904 million
- Accounts receivable makes up 15.53% of Domino's total assets
- Cash generated from operations (for 6 months): $201.553 million
- Cash generated from operations per share (for 6 months): $4.77
Domino's management commentary on the results and business outlook
ANN ARBOR, Michigan, July 16, 2019: Domino’s Pizza, Inc. (NYSE: DPZ), the largest pizza company in the world based on global retail sales, announced results for the second quarter, comprised of growth in global retail sales and earnings per share. Global retail sales increased 5.1% in the second quarter, or 8.4% without the negative impact of changes in foreign currency exchange rates. U.S. same store sales grew 3.0% during the quarter versus the prior year quarter, continuing the positive sales momentum in the Company’s U.S. business. The international division also posted positive results, with same store sales growth of 2.4% during the quarter.
The second quarter marked the 102 nd consecutive quarter of international same store sales growth and the 33 rd consecutive quarter of U.S. same store sales growth. The Company had second quarter global net store growth of 200 stores, comprised of 42 net new U.S. stores and 158 net new international stores. Diluted EPS was $2.19 for the second quarter of 2019, up 23.0% over the prior year quarter and up 19.0% over the prior year quarter diluted EPS, as adjusted(1) .
On July 10, 2019, the Company’s Board of Directors declared a $0.65 per share quarterly dividend for shareholders of record as of September 13, 2019 to be paid on September 30, 2019. “It was a good second quarter, particularly for global unit growth, as we continue to seek balanced retail sales growth through the blend of same store sales and store growth,” said Ritch Allison, Domino’s Chief Executive Officer. “As a work-in-progress brand, we are constantly striving to improve in needed areas, execute our long-term strategy and build toward Dominant #1 – a goal I continue to feel we are built to achieve.”
Share Repurchases
During the second quarter of 2019, the Company repurchased and retired 12,295 shares of its common stock under its Board of Directors-approved open market share repurchase program for approximately $3.3 million, or an average price of $269.14 per share. As of June 16, 2019, the end of the second quarter, the Company’s total remaining authorized amount for share repurchases was approximately $147.3 million.
The second quarter marked the 102 nd consecutive quarter of international same store sales growth and the 33 rd consecutive quarter of U.S. same store sales growth. The Company had second quarter global net store growth of 200 stores, comprised of 42 net new U.S. stores and 158 net new international stores. Diluted EPS was $2.19 for the second quarter of 2019, up 23.0% over the prior year quarter and up 19.0% over the prior year quarter diluted EPS, as adjusted(1) .
On July 10, 2019, the Company’s Board of Directors declared a $0.65 per share quarterly dividend for shareholders of record as of September 13, 2019 to be paid on September 30, 2019. “It was a good second quarter, particularly for global unit growth, as we continue to seek balanced retail sales growth through the blend of same store sales and store growth,” said Ritch Allison, Domino’s Chief Executive Officer. “As a work-in-progress brand, we are constantly striving to improve in needed areas, execute our long-term strategy and build toward Dominant #1 – a goal I continue to feel we are built to achieve.”
Share Repurchases
During the second quarter of 2019, the Company repurchased and retired 12,295 shares of its common stock under its Board of Directors-approved open market share repurchase program for approximately $3.3 million, or an average price of $269.14 per share. As of June 16, 2019, the end of the second quarter, the Company’s total remaining authorized amount for share repurchases was approximately $147.3 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 $76.40 a stock and its currently trading at $242.13 a stock. That's a very strong return of 216.9% 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 low of $220.90 than it is to its 52 week high of $302.04 which to us is a clear indication that the short term sentiment and momentum of Domino's stock is negative at this point in time.
Recent coverage of Domino's Pizza
The extract below discusses Domino's upcoming earnings release as obtained from Zacks.
Wall Street expects a year-over-year increase in earnings on higher revenues when Domino's Pizza (DPZ - Free Report) reports results for the quarter ended September 2019. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on October 8. On the other hand, if they miss, the stock may move lower.
While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise.
Zacks Consensus Estimate
This pizza chain is expected to post quarterly earnings of $2.06 per share in its upcoming report, which represents a year-over-year change of +5.6%.
Read the full article here
Wall Street expects a year-over-year increase in earnings on higher revenues when Domino's Pizza (DPZ - Free Report) reports results for the quarter ended September 2019. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on October 8. On the other hand, if they miss, the stock may move lower.
While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise.
Zacks Consensus Estimate
This pizza chain is expected to post quarterly earnings of $2.06 per share in its upcoming report, which represents a year-over-year change of +5.6%.
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 latest earnings report? Based on the group's latest earnings and their outlook provided our valuation model provides a target (full value) at $183.40 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 (full value) price which in this case is $183.40. Thus we see a good entry point into Domino's stock at $165 or below. We believe that Domino's stock will pull back in coming weeks and months to levels closer to our target (full value) price, unless their 3rd quarter earnings release on 8 October 2019 surprises to the upside, if not we cannot see Domino's continuing to trade at its current valuation levels.
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $183.40. Thus we see a good entry point into Domino's stock at $165 or below. We believe that Domino's stock will pull back in coming weeks and months to levels closer to our target (full value) price, unless their 3rd quarter earnings release on 8 October 2019 surprises to the upside, if not we cannot see Domino's continuing to trade at its current valuation levels.