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Factors Likely to Influence Domino's (DPZ) Earnings in Q4

Zacks Equity Research

Domino's Pizza, Inc. DPZ is scheduled to report fourth-quarter 2018 earnings on Feb 21, before market open. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 12.7%. Also, in three of the trailing four quarters, the bottom line outpaced the consensus estimate, the average beat being 7.7%.

Q4 Expectations

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $2.66, higher than $1.94 reported in the year-ago quarter. Over the past seven days, Domino's earnings estimates have inched up 0.4%. In third-quarter 2018, the company witnessed a 53.5% bottom-line growth year over year. For revenues, the consensus mark stands at nearly $1,092 million, mirroring a 22.5% 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

In the quarter to be reported, Domino's results are likely to be driven by increased sales at both domestic and international stores. Notably, the Zacks Consensus Estimate for same-store sales at Domino’s domestic stores (including company-owned and franchise stores) is likely to move 8% north, above 6.3% growth recorded in third-quarter 2018. At domestic company-owned stores, the same is expected to witnesses a 7.2% improvement, higher than 3.8% in the year-ago quarter. Notably, the third quarter marked the 30th consecutive quarter of positive U.S. comparable sales and the 99th 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.

Over the past few quarters, Domino’s remodeling efforts have gained momentum leading to sales improvement. The company is on track to convert all of its restaurants to the “Pizza Theater” prototype, which offers a comfy lobby, open-area viewing of the food preparation process and the ability to track carryout orders electronically on a lobby screen. Domino’s remodeling initiative is thus expected to consistently enhance its potential as a brand and augment guest experience.

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 fourth 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. 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 -1.09% 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 fourth quarter:

Jack in the Box JACK has an Earnings ESP of +1.93% and a Zacks Rank #3. The company is scheduled to report quarterly numbers on Feb 20.

Cracker Barrel CBRL has a Zacks Rank #2 and an Earnings ESP of +0.95%. The company is scheduled to report its quarterly numbers on Feb 26.

El Pollo Loco LOCO has an Earnings ESP of +7.14%. The company carries a Zacks Rank #2.

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Domino's Pizza Inc (DPZ) : Free Stock Analysis Report
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Cracker Barrel Old Country Store, Inc. (CBRL) : Free Stock Analysis Report
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