Domino’s: Zacks’ Bull of the Day Play

Domino’s Pizza, Inc. (DPZAnalyst Report) posted another set of stellar quarterly results recently despite a tough consumer environment. Shares of this Zacks Rank #1 (Strong Buy) soared to a new all-time high as analysts raised full year estimates.

Domino’s is one of the world’s largest pizza restaurant brands with 11,250 stores in 75 global markets. It’s international sales now account for more than 50% of the company’s revenue.

Its one of the leaders in the restaurant industry in deploying digital channels, such as smartphone and iPad apps, to take sales.

In June 2014, Domino’s debuted voice ordering for its iPhone and Android apps.

Another Earnings Beat

On Oct 14, for the fourth straight quarter, Domino’s beat the Zacks Consensus Estimate for the third quarter. Earnings were 63 cents compared to the Zacks Consensus Estimate of 61 cents.

It has an impressive earnings surprise track record, only having missed twice in the last 5 years.

But it wasn’t earnings which impressed investors.

Domestic same store sales jumped 7.7% year over year while international same store sales rose 7.1%. It was the 83rd consecutive quarter of international same store sales growth.

These same store sales numbers put Domino’s among the elite of the restaurant brands right now, along with the likes of Chipotle.

Total revenue rose 10.5% due to higher supply chain revenue from increased volumes in the supply chain centers and elevated commodity prices, especially cheese, as well as increased sales of equipment and supplies to stores that are reimaging.

Shares Jump to New High

Shares surged to a new all-time high on the results.

But if you’re buying them now, you’re not getting them cheap.

Domino’s trades with a forward P/E of 28.8, the highest forward P/E since the company went public in 2004.

It does have growth, however. It has an impressive earnings growth history over the past 5 years.

Analysts expect earnings to rise another 18.6% in 2014 and 17% in 2015.

If you’re willing to pay up for the growth and you’re looking for a consumer-play, then Domino’s is certainly one to keep on your short list.

[The author of this article owns shares of DPZ.]

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Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.


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