On Friday, Loop Capital adjusted the price target for Domino's Pizza (NYSE:DPZ) to $419, down from the previous $507, while retaining a Hold rating on the stock. This revision follows the company's second-quarter earnings report, which surpassed expectations but also presented a reduced forecast for international unit growth.
Domino's Pizza reported a second-quarter earnings per share (EPS) of $4.03, which exceeded Loop Capital's projection of $3.49 and the consensus estimate of $3.68. A significant factor in the earnings beat was an unrealized gain of $11.1 million from the company's investment in DPC Dash in China, contributing over $0.25 to the EPS according to Loop Capital's model.
In the United States, franchised same-store sales saw a 4.8% increase in the second quarter, which fell within the range of Loop Capital's 4.5% growth estimate and the consensus of a 4.9% rise. This performance aligns with the 4.5-5.0% growth uncovered in Loop Capital's most recent checks, published on July 10, 2024.
Internationally, Domino's experienced a 2.1% growth in comparable store sales during the second quarter, outperforming Loop Capital's forecast of 1.0% and the consensus estimate of 0.8%. Despite these positive figures, the company's outlook on international expansion has been scaled back.
The firm's decision to lower the price target to $419 is based on 24 times the revised EPS estimate for the year 2025. Loop Capital's ongoing Hold rating reflects their current assessment of Domino's Pizza's stock amidst the latest financial results and growth projections.
In other recent news, Domino's Pizza reported second-quarter sales growth of 4.8%, slightly below the anticipated 4.91%, reflecting cautious consumer spending. Despite this, the company surpassed profit expectations, earning $4.03 per share against the anticipated $3.68, and reported a gross margin increase to 39.8% from 39.5% the previous year. The company's overall revenue met the target, reporting $1.10 billion for the quarter.
In response to flat growth forecasts, Domino's Pizza Enterprises announced plans to close several underperforming stores in Japan and France, a move expected to have a near-term negative impact on earnings projections according to analysts from Macquarie and UBS.
Following these developments, Morgan Stanley (NYSE:MS) and Macquarie adjusted their earnings estimates downwards. Stephens, JPMorgan (NYSE:JPM), and Evercore ISI revised their price targets for Domino's Pizza to $430, $450, and $500 respectively, while Baird upgraded the company's shares from Neutral to Outperform, raising its price target to $580.
These are among the recent developments for Domino's Pizza.
InvestingPro Insights
As Domino's Pizza navigates the post-earnings landscape, real-time data from InvestingPro paints a detailed financial picture. With a market capitalization of $14.25 billion and a P/E ratio that stands at 26.38, investors are closely watching the company's valuation metrics. The slight decrease in revenue growth over the last twelve months, at -0.24%, contrasts with a more encouraging quarterly revenue growth of 5.88% in Q1 2023, suggesting a nuanced financial trajectory.
Two InvestingPro Tips stand out in relation to Domino's recent performance. Firstly, analysts have shown a vote of confidence by revising their earnings upwards for the upcoming period, which could signal a positive outlook for the company's profitability. Additionally, the fact that Domino's has raised its dividend for 10 consecutive years underscores a commitment to shareholder returns, even as the market adjusts to the new data. For investors seeking a deeper dive into Domino's potential, there are 12 additional InvestingPro Tips available, offering insights that could guide investment decisions.
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