Domino's Pizza Inc ($DPZ) Earnings (Q3 FY22)

 Domino's Pizza Inc. ($DPZ) Earnings and Opinion:


Domino's Pizza is a company in the Consumer Cyclical sector and operates in the Restaurants industry. The company operates as a pizza company in the United States and internationally. Domino's Pizza was founded in 1960 and is based in Ann Arbor, Michigan. The company made its debut on the stock market in 2004.

Domino's Pizza Earnings Results:

  • Revenues of $1.069B beating expectations of $1.064B
  • Operating Income of $176M missing expectations of $178M
  • Operating Margin of 16.51% missing expectations of 16.82%
  • FCF of $158.9M beating expectations of $129.86M
  • Adj Diluted EPS of $2.79 missing expectations of $2.96
Opinion:
Domino's Pizza is soaring in todays trading session. The company reported earnings before the market opened this morning. Although the overall earnings report was not the best, the company is up over 7.5% right now. I think one metric is striking investors to be bullish on Domino's. The company saw same-store sales rise 2% in the United States in Q3. The CEO also seems very poised, he believes that Domino's will emerge from the volatility, stronger than ever. Looking into the earnings report, we see a -5.9% miss from estimates on EPS. Revenue had a slight beat, but showed some solid growth on a YOY basis. Free Cash Flow had a nice beat, with a 22.36% beat compared to estimates. Margins dropped a little bit, but this is explainable, because we are seeing rising costs and with a company that has slim margins to begin with, it shouldn't be much for the investors to worry about. Domino's is handing the inflationary environment well, they are able to make up for these rising costs by growing same-store sales. As far as valuation goes, the P/E ratio is at 26.29, which is above competitors. The EV/EBITDA is at 19.60, which is also above competitors levels. P/S comes in lower than the average at 2.62. In my opinion, Domino's didn't impress me as much as it did other investors. If I was blankly looking at this report with no knowledge of stock price, I would've thought this stock may have declined. I guess a lot of investor sentiment was reliant on the same-store sales metric. I loved the Free Cash Flow numbers, but you know those are always changing, so not a good metric to judge on. Looking at the analyst ratings on Domino's, we can see there is some bullish takes. I can see this as a great ST play, especially if the momentum is favoring it. However, I may not like this as a long-term play. I think it has already passed its growth days, and is more of a value stock now. You won't get the returns you would get from a typical growth stock. With this being the case, I would not add this to my Long-Term portfolio. However, you may want to look into trading with this one, you could probably make a pretty penny doing that.


*Information from Bloomberg and Yahoo Finance

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