Domino’s bottom line performance on an upward trend
Must-read overview: Domino's strong 3Q 2014 earnings (Part 11 of 15)
Summary
Domino’s Pizza, Inc. (DPZ) reported a net income of $35.6 million, which was up 16% compared to $30.6 million in the third quarter a year ago. The growth in net income was due to higher same-store sales and unit growth, as we saw earlier in this series. The net profit margins were also up 40 basis points (1%= 100 basis points) to 8%, compared to 7.6% in the same quarter a year ago. Yum! Brands too, had a profit margin around 8% in the same quarter.
Domino’s operating margin was 29.9%, which remained unchanged compared to the corresponding quarter in 2013.
The company had an effective tax rate of 37.5%, which was higher than Yum! Brand’s ~32%, and McDonald’s Corporation’s (MCD) ~31%. Tim Hortons Inc. (THI) is based out of Ontario, Canada. Tim Hortons’ effective tax rate was much lower than Domino’s, coming in at between 23% and 29% for the last four years.
Domino’s share repurchase program
The company repurchased shares worth $17.4 million in the third quarter. According to the company, this repurchase program boosted earnings per share, or EPS, by $0.01. When a company repurchases shares, the number of outstanding shares in the market are fewer, which boosts the value per share. This is an alternate way of giving cash back to the shareholders.
The company disbursed $14 million in dividends and has a yield of 1.3%. Domino’s competition, Pizza Hut, which is owned by Yum! Brands, Inc. (YUM), has a dividend yield of 2.4%. Papa John’s International, Inc. (PZZA) has a yield of 1.31%. We’ll look at dividends in more detail, next.
For a wider exposure to restaurant stocks, you might consider an ETF such as the Consumer Discretionary Select Sector SPDR Fund (XLY).
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