Domino’s Pizza, Inc. (DPZ) just jumped into a new multi-year high after reporting strong Q1 results that included a 24% earnings surprise. With the company seeing strong international gains and a bullish growth projection, this Zacks #1 stock is a tasty pick for momentum.
Company Description
Domino’s Pizza, Inc., through its subsidiaries, operates or franchises over 9,450 stores worldwide. The company was founded in 1960 and has a market cap of $1.48 billion.
Domino’s has been on a tear for the last year after introducing a new pizza recipe and focusing on international growth. That trend showed up in the company’s Q1 results from early May that came in well ahead of expectations.
First-Quarter Results
Revenue for the period was up 2% from last year to $389 million. Earnings looked even better, coming in at 42 cents, 24% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 13% over the last four quarters.
The strong quarter was led by international gains, where same-store sales were up an impressive 8.3% from last year. The company domestic business saw same-store sales decline 1.4%, but that comes on the heels of a huge 14.3% comparison from last year. Moving forward, Domino’s believes that its growing customer base will keep domestic same-store sales on the rise.
Financial Profile
The company has used its recent earnings momentum to strengthen its balance sheet, with cash and short-term investments up $63 million from last year to $177 million while its total debt fell $64 million to $1.45 billion.
Estimates
We saw some decent movement in estimates off the good quarter, with the current year adding 8 cents to $1.53. The next-year estimate was also up 8 cents to $1.70, a bullish 11% growth projection.
Valuation
But in spite of the gains, the valuation picture still looks solid, with a forward P/E of 15X a discount to its peer average of 18X.
6-Month Chart
On the chart, DPZ jumped higher off the good quarter, hitting a new multi-year high in the process. Look for support from the long-term trend, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.
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