Domino's Pizza (DPZ) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this pizza chain, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for Domino's Pizza, as there has been strong agreement among the covering analysts in raising estimates.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
The company is expected to earn $2.67 per share for the current quarter, which represents a year-over-year change of +30.24%.
The Zacks Consensus Estimate for Domino's Pizza has increased 12.55% over the last 30 days, as nine estimates have gone higher compared to no negative revisions.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $12.54 per share, representing a year-over-year change of +31.03%.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for Domino's Pizza. Over the past month, 11 estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 10.81%.
Favorable Zacks Rank
The promising estimate revisions have helped Domino's Pizza earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Investors have been betting on Domino's Pizza because of its solid estimate revisions, as evident from the stock's 5.5% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.
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Dominos Pizza Inc (DPZ) : Free Stock Analysis Report
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