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Domino's (DPZ) Q1 Earnings to Gain From Solid Domestic Sales

Zacks Equity Research

Domino's Pizza, Inc. DPZ is scheduled to report first-quarter 2019 earnings on Apr 24, before market open. In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 1.5%. However, in three of the trailing four quarters, the bottom line outpaced the consensus mark, the average beat being 7.3%.

Q1 Expectations

The Zacks Consensus Estimate for first-quarter earnings is pegged at $2.08, above $2.00 reported in the year-ago quarter. Over the past seven days, the company’s earnings estimates have inched down 0.5%. In fourth-quarter 2018, Domino's witnessed 25.4% bottom-line growth year over year. For quarterly revenues, the consensus mark stands at nearly $846 million, mirroring a 7.7% improvement from the prior-year quarter number.    

Let’s delve deeper to find out how the company’s top and bottom line will shape up this earnings season.

Factors at Play

Domino's robust international and domestic revenues are expected to boost its first-quarter 2019 results. The Zacks Consensus Estimate for International franchise royalties and fees is pegged at $57 million, up 9.6% year over year. Moreover, revenues from domestic company-owned stores, franchise and supply chain are pegged at $127 million, $100 million and $486 million, up more than 4%, 12% and 10%, respectively.

For same-store sales at Domino’s domestic stores (including company-owned and franchise stores), the consensus mark is likely to move 6.5% north, above 5.6% recorded in fourth-quarter 2018. At domestic company-owned stores, the same is expected to increase 5%, below 6.4% registered in the year-ago quarter. Notably, the fourth quarter marked the 31st consecutive quarter of positive U.S. comparable sales and 100th consecutive quarter of positive international comps.

Since Domino’s earns a chunk of its revenues from outside the United States, the company remains committed toward accelerating its presence in high-growth international markets to boost its business. Meanwhile, the company’s international growth continues to be strong and diversified across markets owing to exceptional unit level economics.

However, high costs, negative currency translation along with a tricky consumer spending environment in the U.S. restaurant space remain potent headwinds for the company.

Domino's Pizza Inc Price and EPS Surprise

Domino's Pizza Inc Price and EPS Surprise | Domino's Pizza Inc Quote

 

What Does the Zacks Model Unveil?

Our proven model does not conclusively show that Domino's is likely to beat earnings estimates in the first quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. Meanwhile, stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Domino's has an Earnings ESP of -1.91% and a Zacks Rank #3, which make surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stock With Favorable Combinations

Here are a few other stocks from the Restaurant space that investors may consider as our model shows that they have the right combination of elements to post an earnings beat in the first quarter:

Bloomin’ Brands BLMN has a Zacks Rank #3 and an Earnings ESP of +4.17%. The company is scheduled to report quarterly numbers on Apr 25.

Yum! Brands YUM has an Earnings ESP of +3.11% and a Zacks Rank #2. The company is scheduled to report quarterly numbers on May 1.

Dunkin’ Brands DNKN has an Earnings ESP of +0.27% and a Zacks Rank #3.

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Domino's Pizza Inc (DPZ) : Free Stock Analysis Report
 
Yum! Brands, Inc. (YUM) : Free Stock Analysis Report
 
Dunkin' Brands Group, Inc. (DNKN) : Free Stock Analysis Report
 
Bloomin' Brands, Inc. (BLMN) : Free Stock Analysis Report
 
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