Did Analysts Set the Bar Too High for Domino's Pizza in Q3?

Domino’s Pizza Inc. (NYSE:  DPZ) released its third-quarter financial results before the markets opened on Thursday. The company said that it had $2.49 in earnings per share (EPS) and $967.72 million in revenue, while consensus estimates had called for $2.78 in EPS on revenue of $952.97 million. In the same period of last year, the pizza chain posted EPS of $2.05 and $820.8 million in revenue.

During the latest quarter, revenues increased 17.9% year over year. This increase was primarily due to higher U.S. retail sales resulting from same-store sales growth and an increase in store counts during the trailing four quarters, resulting in higher supply chain, U.S. franchise and U.S. company-owned stores revenues.

Net income increased 14.8% from the same period last year, primarily driven by higher income from operations resulting from increased U.S. franchise revenues, as well as higher supply chain volumes, partially offset by higher variable performance-based compensation expense, as well as COVID-19-related costs.

The company reported 209 gross new stores and 83 net new stores, comprised of 44 net new U.S. stores and 39 net new international stores. The company’s net store growth reflects the closure of 126 stores, primarily in India. The number of temporary store closures in certain of the company’s international markets declined during the third quarter of 2020.

The firm’s board of directors declared a $0.78 per share quarterly dividend for shareholders of record as of December 15, 2020, to be paid on December 30, 2020.

The company provided no guidance for the fiscal fourth quarter. However, consensus estimates call for $4.08 in EPS and $1.33 billion in revenue for the quarter.

Domino’s Pizza stock traded down 7.8% on Thursday, at $397.27 in a 52-week range of $247.50 to $435.58. The consensus price target is just $434.64.