Domino’s Pizza Earnings: Five Quarters in a Row of Expanding Margins, Net Income Climbs

Domino’s Pizza Inc. (NYSE:DPZ) reported its results for the third quarter. Domino’s Pizza, through its subsidiaries, is engaged in retail sales of food through Domino’s Pizza stores, sales equipment and supplies to Domino’s Pizza stores, and receipt of royalties from domestic and international Domino’s Pizza franchise.

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Domino’s Pizza Inc. Earnings Cheat Sheet

Results: Net income for Domino’s Pizza Inc. rose to $26 million (44 cents per share) vs. $22.1 million (36 cents per share) in the same quarter a year earlier. This marks a rise of 17.7% from the year-earlier quarter.

Revenue: Rose 0.5% to $378.1 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Domino’s Pizza Inc. fell short of the mean analyst estimate of 46 cents per share. It fell short of the average revenue estimate of $387.9 million.

Quoting Management: J. Patrick Doyle, Domino’s President and Chief Executive Officer, said: “I believe that the consistent, positive performance we have been able to achieve is the mark of a great brand and a great team. This quarter, our franchise partners around the world have collectively reached an important 10,000-store milestone. This puts Domino’s among the largest international restaurant brands in the world. Our system’s ability to repeat and maintain strong results – coupled with our commitment to innovation and continuous improvement – gives us confidence that we have lots of runway for growth in the years to come.”

Key Stats:

Last quarter marked the fifth consecutive quarter of gross margins expanding, as the company’s gross margin expanded two percentage points from the year-earlier quarter to 29.5%. Over that span, margins have grown, on average, 1.1 percentage points per quarter on a year-over-year basis.

Last quarter’s year-over-year revenue increase follows two quarters of revenue declines. Revenue fell 2.3% in the second quarter and fell 1.2% in the first quarter.

The company has now fallen short of estimates in the last two quarters. In the second quarter, it missed expectations by 2 cents with net income of 47 cents versus a mean estimate of net income of 49 cents per share.

The company has now seen net income rise in two straight quarters. In the second quarter, net income rose 11.3% from the year earlier.

Looking Forward: Over the past ninety days, the average estimate for the fourth quarter has fallen from 42 cents per share to 41 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. The average estimate for the fiscal year is $1.93 per share, down from $1.96 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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