Domino's (DPZ) Q1 Earnings & Revenues Surpass Estimates
Domino's Pizza, Inc. DPZ reported impressive first-quarter 2018 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Following the quarterly results, shares of the company increased 7.3% yesterday. In a year’s time, the stock has surged 38.7% compared with the industry’s gain of 2.7%.
Adjusted earnings of $2.00 per share outpaced the consensus mark of $1.77 and increased 58.7% on a year-over-year basis. The bottom-line improvement was driven by higher net income and lower diluted share count as a result of share repurchases.
Quarterly revenues were up 25.8% year over year to $785.4 million, which exceeded the Zacks Consensus Estimate of $686 million. Moreover, in the quarter under review, the company adopted new accounting standard that resulted in revenues recognition of $82.2 million from domestic franchise advertising. Also, increase in supply chain volumes owing to robust order and store count growth contributed to rise in revenues.
Comps
Global retail sales (including total sales of franchise and company-owned units) were up 16.8% year over year. The uptick was owing to strong comps from international stores (up 20.8%) and domestic stores (up 12.7%). Excluding foreign currency impact, global retail sales increased 13.1%.
In the first quarter, the company’s domestic stores (including company-owned and franchise stores) comps improved 8.3%. This compared unfavorably with 10.2% growth in the year-ago quarter.
At domestic company-owned stores, Domino’s experienced year-over-year comps growth of 6.4%, lower than 14.1% in the year-ago quarter. Also, domestic franchise stores comps grew 8.4% compared with 9.8% in the prior-year quarter.
Comps at international stores, excluding foreign currency translation, were up 5%. This was comparatively better than 4.3% in the year-ago quarter.
Notably, the first quarter marked the 28th consecutive quarter of positive U.S. comparable sales and 97th consecutive quarter of positive international comps.
Margins
Domino’s operating margin increased 720 bps year over year to 38.2% in the reported quarter. Also, the net income margin rose 130 bps to 11.3%. The uptick in the company’s net income was primarily driven by an increase in comps growth and store count as well as higher supply chain volumes and global royalty revenues. The adoption of the new equity-based compensation accounting standard too drove net income. However, the increase was partially offset by rise in net interest expenses owing to higher net debt levels and rise in general and administrative expenses.
Balance Sheet
As of Mar 25, 2018, cash and cash equivalents were $44.6 million, down from $35.8 million as of Dec 31, 2017. Long-term debt at the end of quarter was $3,117.2 million, up from $3,121.5 million as of Dec 31, 2017.
Inventory, at the end of the first quarter, amounted to $41.2 million, down from $40 million in first-quarter 2017.
Cash flows from operating activities as of Mar 25, 2018 were $88.8 million In the quarter under review, Domino’s has spent $13.6 million on capital expenditures compared with $12.4 million in the prior-year quarter.
Domino’s has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Domino's Pizza Inc Price, Consensus and EPS Surprise
Domino's Pizza Inc Price, Consensus and EPS Surprise | Domino's Pizza Inc Quote
Upcoming Releases
Red Rock Resorts, Inc. RRR has an Earnings ESP of +1.37% and a Zacks Rank #3. The company is likely to report first-quarter results on May 3.
Wingstop WING has an Earnings ESP of +5.66% and a Zacks Rank of 3. The company is slated to release first-quarter results on May 3, after market close.
Wendy’s WEN has an Earnings ESP of +2.72% and a Zacks Rank #4. The company is scheduled to report first-quarter results on May 8, after market close.
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