Domino’s misses expectations – still an outperformer
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Domino’s misses expectations – still an outperformer

Domino’s Pizza has had a stellar run when it comes to same-store growth. The fast-food delivery service – a market leader in its space – gas delivered 29 straight quarters of positive results regarding this metric, with the last contraction noted in 2011. At the end of last week, the company added another positive quarter to its collection – but, with a 6.9% increase against the same period in the previous year – it wasn’t quite as high as analysts had hoped. Likewise, revenue for the quarter rose by 24% year on year, but investors had hoped for more.

Domino’s share price has risen by 49% so far this year

graph 2307 domino

SOURCE: Yahoo Finance

These robust results didn’t meet expectations, hence a share price decline of around 3% (the stock is still up by almost 50% so far this year though). But Domino’s did log a beat against the Street too, with earnings per share coming in at $1.84 against analysts’ expectations of $1.75. Ritch Allison, the company’s new CEO, said: "Global retail sales remain strong as we see our franchisees building new stores, growing same store sales and bringing customers back again and again."

Analysts are generally still upbeat about what, by any measure, was a positive set of results that fell short of, perhaps, overhyped expectations. David Tarantino, a Baird analyst, wrote: "Although domestic comps likely did not live up to high investor expectations (recent whispers closer to 7% to 8%), we view Q2 performance as very solid and reflective of ongoing brand momentum that is being supported by a multitude of internal factors that should continue to support trends in [second half 2018]."

Dominion analyst Christian Cole agrees, writing in a note that the company had released: “another set of strong results, with Domino’s continuing to grow well ahead of the underlying growth rate for its industry, taking market share in all of its regions and continuing to leverage its dedicated Ecommerce platform.”

Disclosure

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


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