Beat on earnings and takeover speculation sends Domino’s higher
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Beat on earnings and takeover speculation sends Domino’s higher

Domino’s Pizza delivered a buy-one-get-one-free treat to investors this week, beating the Street on profit expectations for its last quarter amid speculations that it’s an acquisition target. Domino’s share price – which has had an impressive run already this year – continued to trade up on the back of the news.

Just 2 months into 2018, Domino’s share price is approaching the +20% mark

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SOURCE: Yahoo Finance

Domino’s delivered a healthy beat on profit for the fourth quarter of 2017, seeing a 28% rise from the year-ago quarter. The company reported earnings of $93.3 million, or $2.09 per share, beating out expectations of $1.95 per share. Despite this clear win, the quarter wasn’t all plain sailing. The company reported same-store sales growth of 3.8% at its own U.S. outlets, 4.2% at franchises across the country, and 2.5% internationally (all year on year). All these figures are positive, but they’re a shade lower than analysts had hoped for.

Domino’s CEO, J. Patrick Doyle, said that international same-store sales were hurt by weakness in Japan, and said that its business remains healthy. Addressing concerns about the industry shifting from an “eat-in” model to a “take-away” model, Doyle said: “As long as all that’s happening is it’s shifting from one restaurant chain from a carry-out transaction to a delivery transaction ... I don’t know that it really makes any difference.”

Doyle will step down as CEO in June, making way for Richard Allison, president of the company’s international business to take the reigns. Doyle is widely seen as a superstar-CEO, and some investors have raised his departure as a cause for concern.

However, the various minor or circumspect worries that investors may have had over missed expectations or out-going CEOs were eclipsed by a report from Brazil Journal. The publication said that Restaurant Brands International, owner of Burger King and other big brands, was putting together a bid to buy Domino’s. The report cited “people with knowledge of the matter” but other publications have thus far been unable to confirm its veracity.


Dominion holds Domino’s Pizza in its Global Trends Managed Fund.

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