Shares of Domino's Pizza, Inc. (DPZ) hit a new 52-week high of $92.45 on Nov 13. In fact, the company’s share price has been gaining momentum since it posted strong third quarter results on Oct 14 wherein earnings and revenues beat the Zacks Consensus Estimate. Share price of the company has surged 9% since then.
Adjusted earnings of 63 cents per share rose 23.5% year over year driven by strong revenues and lower outstanding share count. Quarterly revenues increased 10.5% year over year to $446.6 million and surpassed the Zacks Consensus Estimate of $436.0 million by 2.4%. Revenues were driven by strong comps — both in the domestic and international markets. Higher supply chain revenues due to higher commodity prices and increased volumes also boosted the top line.
In fact, Domino’s has been posting impressive results for the past few quarters on the back of higher traffic at its restaurants and unit growth. The company’s international operations promise significant growth. Since Domino’s earns a chunk of its revenues from outside the U.S., it remains committed to accelerate its presence in high-growth international markets to boost its business.
Domino’s is also investing heavily in technology-driven initiatives like digital ordering to boost sales. The digital wave has hit the U.S. fast casual restaurant sector and we believe that the company’s digital ordering system is helping it to sustain the top-line momentum. We also believe that the company’s foray into the Pan Pizza and Specialty Chicken categories, re-imaging of restaurants and other sales initiatives is taking the revenue graph higher. Owing to these initiatives, the company has been able to post solid results this year. In fact, the company’s closing price of $91.80 reflects a year-to-date return of over 34.5%.
Domino's Pizza presently has a Zacks Rank #2 (Buy). Investors interested in the restaurant industry may consider stocks like BJ's Restaurants, Inc. (BJRI), DineEquity, Inc. (DIN) and Ruby Tuesday, Inc. (RT). All these stocks sport a Zacks Rank #1 (Strong Buy).
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