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Domino's Reports Solid U.S. Comps Despite Coronavirus Pandemic

Zacks Equity Research

Domino's Pizza Inc DPZ announced preliminary results for the first eight weeks of second-quarter 2020. Following the announcement, the company’s shares rose 1.1% in after-hours trading session yesterday. 

A glimpse of the company’s price trend reveals that Domino's has outperformed its industry so far this year. The stock has gained 22.6% against the industry’s decline of 8.7%.

Preliminary Results

In the first eight weeks of the second quarter, preliminary total Global retail sales increased 2.9% year over year. Preliminary comps at international stores declined 11.6%, while preliminary comps at domestic the U.S. stores rose 17.8% year over year. Excluding foreign currency impact, global retail sales are expected to increase 5.7%.

Moreover, in the first eight weeks of the second quarter, preliminary comps at U.S. company-owned stores, U.S. franchise stores, U.S. stores and International stores (excluding foreign currency impact) increased 16.2%, 13.9%, 14% and 1 %, year over year, respectively.

Coming to the international market closures resulting from COVID-19 outbreak, as of May 24, the company temporarily closed approximately 900 restaurants. However, with dining rooms closed, all of the company's U.S. stores remain open deploying contactless delivery and carryout services.

Other Business Updates

Notably, temporary closures, partial-week openings, abbreviated store hours and limited service methods are likely to pressurize international same-store and retail sales in the near term. Nonetheless, the company is focused on execution, service and value as it continues to navigate through the COVID-19 headwinds. Furthermore, it intends to continue its traditional quarterly reporting without further indulgence in intra-quarter business updates related to the pandemic.

Zacks Rank & Other Key Picks

Domino’s currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other top-ranked stocks in the Retail-Wholesale sector are Sprouts Farmers Market, Inc. SFM, Wingstop Inc. WING and Yum China Holdings, Inc. YUMC. Sprouts Farmers sports a Zacks Rank #1, while Wingstop and Yum China carry a Zacks Rank #2.

Sprouts Farmers has a three-five year earnings per share growth rate of 4.4%.

Earnings in 2020 for Wingstop are expected to surge 39.7%.

Yum China has a trailing four-quarter positive earnings surprise of 62.9%, on average. The company’s earnings beat the Zacks Consensus Estimate in the last four quarters.

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Dominos Pizza Inc (DPZ) : Free Stock Analysis Report
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