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Domino's Hits High On Strong Q1 Profit As Eateries Outpace

Domino's Pizza (DPZ) delivered solid first-quarter sales and profit Tuesday, lifting its shares to a new high at a time that restaurant stocks are outperforming the market even as their growth remains modest.

The pizza delivery and takeout giant earned 59 cents a share, 26% higher than last year and 4 cents above analyst estimates.

Revenue grew nearly 9% to $417.6 million, beating Wall Street views by more than $4 million. While still in the single digits, the sales gain was the best in 10 quarters, showing the chain's value offerings were enticing cash-strapped consumers.

"It was a really good quarter," said analyst Peter Saleh of Telsey Advisory Group. "They are operating at a very high level.

Domino's rose 4% to 55.20 on the stock market Tuesday, hitting a record 56.45 intraday.

Hungry For Dining Stocks The Retail-Restaurant industry group is ranked 14 out of 197 tracked by Investor's Business Daily. It was No. 53 just six weeks ago.

After a weak start to the year amid winter storms and payroll tax hikes, dining out picked up in March. Analysts say investors are looking ahead to easier comparisons the rest of the year.

Consumers said they planned to increase future visits to restaurants and spend more in them, according to an April survey sponsored by RBC Capital Markets.

Meanwhile, labor costs remain tame while food expenses are mostly moderating from last year's high levels. Falling chicken-wing prices should help Buffalo Wild Wings (BWLD), which didn't fully benefit in Q1. Buffalo Wild late Monday said EPS fell 11% to 87 cents, much worse than expected. Its stock fell nearly 5% to 89.99 Tuesday, despite an upbeat outlook.

Results could vary wildly depending on the eatery. RBC's restaurant analyst Larry Miller is especially bullish on Starbucks (SBUX).

Fast-casual concepts such as Panera Bread (PNRA) and Chipotle Mexican Grill (CMG) have generally done well, though top-line growth is decelerating at those trendy eateries. Full-service casual dining chains have lost money or stagnated the last two years but have posted slight improvements recently.

Fast-Food Slowdown Even fast-food burger chains are showing only modest gains. McDonald's (MCD) same-store sales rose only 1% in Q1 while earnings edged up 2%, missing views.

"Clearly, our results were well above what most in the (restaurant) category were seeing," CEO Patrick Doyle said in Domino's post-earnings conference call. "Customers have gotten a little more conservative about their balance sheet. We are a good value. That's part of why we had a strong quarter overall.

He said winter storms had little impact on Q1 results.

U.S. same-store sales rose 6.2%. Comps in foreign markets, which host more than half of the chain's 10,330 locations, jumped 6.5%.

Online ordering accounted for around 35% of sales and continues to give Domino's an edge over regional and independent pizza players, management said.

Bloomin' Brands (BLMN), which operates Outback Steakhouse and other chains, said after the close that adjusted Q1 EPS rose 2% to 50 cents — easily beating forecasts. Sales climbed 3.5%. Shares were little changed late.

Texas Roadhouse (TXRH), another sit-down steak chain, shot up 10% in the regular session to a new high after reporting better-than-expected results late Monday.