What to Expect When Domino’s Reports Tuesday Morning

October 7, 2019 by Chris Lange

Domino’s Pizza Inc. (NYSE: DPZ) is scheduled to report third-quarter financial results before markets open on Tuesday. The consensus estimates are calling for $2.07 in earnings per share (EPS) and $824.62 million in revenue. The same period from last year had $1.95 in EPS and $785.97 million in revenue.

In the second quarter, the pizza chain reported $811.6 million in revenues were up from $779.4 million in the second quarter of 2018, but it was less than the $837 million or so expected by analysts. At the same time, EPS came in at $2.19 versus estimates of $2.02 in EPS and was up from $1.78 a year earlier.

Domino’s blamed the revenue shortfall on a decline in U.S. company-owned revenue as the company already was selling 59 company-owned locations to franchisees.

Some restaurant chains seem as though they can grow forever. After a while, even the greatest growth stories will start to see normalized growth begin to takeover. That transition period can be a very painful experience for shareholders who have to watch the shares adjust from hyper-growth to normalized growth. Domino’s is seeing that normalization in growth come to fruition and its shares are paying a price.

Domino’s is still largely considered a pizza chain, but the food delivery and takeout giant has diversified its menu in recent years to increase its opportunity for sales. The food company reported that same-store sales rose by only 3% in the second quarter, down almost four percentage points from the second quarter in 2018.

Overall, Domino’s has underperformed the broad markets with the stock down about 2% year to date. In the past 52 weeks, the stock is down closer to 15%.

A few analysts weighed in on Domino’s ahead of the report:

  • Wedbush has an Outperform rating with a $280 price target.
  • Wells Fargo has a Market Perform rating with a $261 price target.
  • Oppenheimer has a Buy rating with a $295 price target.
  • BTIG Research has a Buy rating with a $325 price target.
  • Deutsche Bank has a Sell rating with a $208 price target.
  • Guggenheim has a Buy rating with a $280 price target.

Shares of Domino’s were last seen at $243.08, with a 52-week range of $220.90 to $302.05. The consensus price target is $281.00.

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