Domino's misses mark on Q3 expectations

Marco Green
October 9, 2019

USA same-store sales grew 2.4% during the quarter from the prior year quarter, and global same-store sales grew 1.7%. Domino's posted EPS of $2.05 on revenue of $820.8 million Dollars, which missed Wall Street's expectations of $2.08 on revenue of $827.2 million USD. Other companies are starting to do the same. Credit Suisse Group decreased their price objective on Domino's Pizza from $320.00 to $300.00 and set an "outperform" rating on the stock in a report on Wednesday, July 17th.

It said it now expects same-store sales at its U.S. stores to rise 2 percent to 5 percent and its worldwide segment to grow 1 percent to 4 percent in two to three years, compared with a previous 3 percent to 6 percent growth at either segment over three to five years.

The pizza chain has 17 "buy" ratings, nine "hold" ratings, and one "sell" rating from analysts, with a consensus price target of $281.38, according to Bloomberg data. On average, analysts predict that Domino's Pizza will post 9.41 EPS for the current fiscal year. Total revenue rose 4.4 percent versus a year ago to $820.8 million, missing the $823.9 million that analysts were anticipating.

Hedge funds have recently modified their holdings of the stock. Cornerstone Advisors Inc. lifted its position in Domino's Pizza by 36.2% in the second quarter. Doyle Wealth Management bought a new stake in Domino's Pizza during the 2nd quarter valued at approximately $30,000.

Domino's has performed strongly in the quick-service pizza market, beating out competitors Pizza Hut and Papa John's. Advisory Services Network LLC now owns 312 shares of the restaurant operator's stock worth $87,000 after purchasing an additional 277 shares in the last quarter.

During the third quarter of 2019, the Company repurchased and retired 384,338 shares of its common stock under its Board of Directors-approved share repurchase program for approximately $93.7 million, or an average price of $243.79 per share.

Revenue break-up: U.S. Company-owned stores: $94.58M (-20.2%); U.S. franchise royalties and fees: $97.05M (+8.5%); Supply chain: $485.11M (+9%); global franchise royalties and fees: $54.59M (+8.3%); U.S. franchise advertising: $89.49M (+8.5%). The company offers pizzas under the Domino's brand name through company-owned and franchised stores.

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