Domino’s Pizza Inc. (DPZ)

Earlier today, Domino’s reported Q3 EPS reached $4.19. This was ahead of our $3.40 forecast and sell-side consensus (according to Consensus Metrix) of $3.64. Importantly, Domino’s minority ownership stake in DPC Dash (Domino’s China; 1405.HK; Not Rated) helped pre-tax income by $26.2 million, in line with our expectations. By our math, this works out to an EPS boost of about +59 cents (matching our expectations). Thus, excluding this help, Q3 EPS would have been about $3.60 — four cents short of consensus. Please note that this DPC Dash-related EPS help was not included in our $3.40 Q3E EPS estimate, nor in consensus.

Earlier today, Domino’s reported Q2 EPS of $4.03. Technically, this was ahead of our $3.70 forecast and sell-side consensus (according to Consensus Metrix) of $3.68. BUT…

Earlier today, Domino’s reported Q1 EPS of $3.58, surpassing our $3.40 estimate and sell-side consensus (according to Consensus Metrix) of $3.39. Excluding a hit from DPC Dash, and help from a better-than-expected tax rate, we calculate that Q1 EPS would have beat consensus by about +37 cents.

Earlier today (Monday), Domino’s reported Q4 EPS of $4.48, coming in above our $4.39 forecast and sell-side consensus (according to Consensus Metrix) of $4.37.

Back on November 1st, the largest Domino’s master franchisee (Australia-based Domino’s Pizza Enterprises) reported that for the first 16 weeks of its fiscal 2024, group same-store sales rose by +2.7%. This +2.7% showing lapped a -1.0% figure from the year-ago period.  For more info, click on the following, and scroll down to presentation slide #12:

Earlier today, Domino’s hosted an Analyst Meeting in Ann Arbor, Michigan that was well-received. Shares of DPZ are up by about +2.5% intraday, as of this writing. Positives include improved (positive) U.S. delivery same-store sales so far in Q4, a 2024-28 annualized target of +3% or greater U.S. same-store sales growth (and management noting it anticipates being above the +3% mark specifically in 2024), and long-term store targets of 8,500+ for the U.S. and 40,000+ for international. Risks include operating margins that the company anticipates will be about flat next year versus 2023 levels.

Earlier today, Domino’s reported Q3 EPS of $4.18. This was above our $3.20 estimate  and sell-side consensus (according to Consensus Metrix) of $3.31. Importantly, the remeasurement of the value of Domino’s investment in DPC Dash (Domino’s China; 1405.HK; Not Rated) added +59 cents to EPS. Excluding this gain, Q3 EPS would have been about $3.59, still well above our estimate and consensus. FYI, we had estimated that the remeasurement would add about +63 cents to Domino’s Q3 EPS; for more info:

Earlier this month, we published reports in which we examined McDonald’s and Yum Brands, and the effect various currencies can have on those companies’ quarterly EPS/operating income. Those reports are available at:

In its second-quarter earnings release this past July 24th, Domino’s noted that for Q2 2023, its “increases in net income were partially offset by a $15.0 million pre-tax unrealized loss associated with the remeasurement of the Company’s investment in DPC Dash Ltd (‘DPC Dash’) which was recorded in other expense in the Company’s condensed consolidated statements of income…. the unrealized loss associated with the remeasurement of the Company’s investment in DPC Dash [was] $0.32” per share.

Earlier today, Domino’s reported Q2 EPS of $3.08, above our $3.05 forecast and sell-side consensus (according to Consensus Metrix) of $3.07.

Earlier today, Domino’s reported Q1 EPS of $2.93, above our $2.70 forecast and sell-side consensus (according to Consensus Metrix), which had ticked up to $2.71 in recent days. The EPS beat appears to have been driven primarily by better-than-expected same-store sales.

In some years, Domino’s U.S. updates its Technology Transaction Fee. This is the amount Domino’s domestic franchisees are charged for each digital transaction, and in 2022 it was raised to $0.295 per digital order. This was up from $0.275 per digital order in 2021 (a year-to-year increase of +2.0 cents per digital order).

Earlier today, Domino’s reported Q4 EPS of $4.43. We note that this included +46 cents from store sales, which we subtract to obtain an adjusted Q4 EPS figure of $3.97. This was ahead of our $3.90 projection and sell-side consensus (according to Consensus Metrix) of $3.95.

Overnight last night, large Domino’s master franchisee Domino’s Pizza Enterprises (DMP.AU; Not Rated) reported that its group same-store sales for the second half of calendar 2022 declined by -0.6%. In addition, this master franchisee’s same-store sales for the first six weeks of calendar 2023 were down by -2.2%. Domino’s Pizza Enterprises – the master franchisee for several markets, including Australia, New Zealand, Japan, France, and Germany – states that it anticipates its full-fiscal 2023 same-store sales will fall below the 3-5 year annualized target range of +3% to +6%, citing what it terms “tumultuous trading conditions.” For more info:

Earlier today, Domino’s reported Q3 EPS of $2.79, below our $3.05 forecast and sell-side consensus (according to Consensus Metrix) of $2.97. The Q3 tax rate was 23.8%, more onerous than our 19.5% estimate and consensus of 19.6%. We calculate that the difference between the Q3 actual tax rate and consensus cost Domino’s about -15 cents in Q3 EPS (in other words, excluding this tax-rate difference, Q3 EPS came in only -2 cents below consensus).

Back in mid-March 2022, Domino’s raised the price of its popular Delivery Mix & Match Deal to $6.99 (from $5.99). For both the Delivery Mix & Match Deal and the Carryout Mix & Match Deal, customers select two or more menu items from a set list. CNN noted back on March 1st that “Domino’s also is expanding the items available in the deal, including the addition of 32-piece parmesan bread bites, 6-piece wings and 3-piece chocolate lava cakes. Some of the other options currently on the menu are medium 2-topping pizza, bread twists, salads and marbled cookie brownies.”

Earlier today, Domino’s reported Q2 EPS of $2.82, short of our $3.00 forecast and sell-side consensus (according to Consensus Metrix) of $2.90. However, the Q2 tax rate of 23.2% was more onerous than our 19.0% projection and consensus of 19.2%. If the tax rate had been equal to consensus, by our calculations Q2 EPS would have been +16 cents higher – placing it +8 cents above consensus, and only -2 cents below our forecast.

Earlier today, Domino’s reported Q1 earnings that disappointed the Street. First-quarter EPS came to $2.50, well short of our $3.05 forecast and sell-side consensus (according to Consensus Metrix) of $3.06.

Domino’s recently announced that it would increase the price of its Delivery Mix & Match offer in the U.S. to $6.99 ($6.99 each for delivery of two or more menu items selected from the Mix & Match menu). We believe that by the end of March, this menu-price increase was substantially complete. What could it mean for Domino’s earnings?

In some years, Domino’s U.S. updates its Technology Transaction Fee. This is the amount Domino’s domestic franchisees are charged for each digital transaction, and in 2021 it was raised to $0.275 per digital order. This was up from $0.260 per digital order in 2020 (a year-to-year increase of +1.5 cents per digital order). We estimate that this increase added about +12 cents to Domino’s 2021 EPS, which in total ending up amounting to $13.60.

Earlier today, Domino’s reported its Q4 earnings, and also announced a CEO transition.  Regarding the fourth quarter, EPS reached $4.25, close to our $4.24 estimate and sell-side consensus (according to Consensus Metrix) of $4.28. But importantly, this includes the benefit of “a $34.3 million pre-tax unrealized gain on the Company’s investment in DPC Dash Ltd…. the Company’s master franchisee” for Domino’s China. On today’s call, the company indicated that this change accounted for +68 cents of Q4 EPS.

Earlier today, Domino’s reported that its Q3 U.S. same-store sales declined by -1.9%. This was lapping a +17.5% figure from Q3 2020 — the best quarterly performance in this regard in over 20 years — but nevertheless the -1.9% was still a disappointment. It fell short of our +2.0% forecast and sell-side consensus (according to Consensus Metrix) of +1.6%. The -1.9% showing is the first negative same-store sales quarter for Domino’s U.S. since Q1 2011’s -1.4% (which lapped a +14.3% from Q1 2010).

Earlier today, Domino’s reported adjusted Q2 EPS of $3.12, surpassing our $2.90 forecast and sell-side consensus (according to Consensus Metrix) of $2.88.

Are signs starting to emerge that Domino’s long-term worldwide unit growth potential could be meaningfully higher than the Street currently believes?

With this report, we boost our Q2E same-store sales forecasts as follows: (1) for Domino’s U.S., up by +120 basis points, to -1.0% (according to Consensus Metrix, sell-side consensus is at -1.8% as of this writing), and (2) for Domino’s International, up by +200 basis points, to +12.0% (sell-side consensus is at +10.0% as of this writing).

Earlier today, Domino’s reported Q1 EPS of $3.00. This was higher than our $2.95 forecast and sell-side consensus (according to Consensus Metrix) of $2.94. We attribute the EPS outperformance to better-than-expected same-store sales in both the U.S. and International business segments.

With this report, we increase our Q1E U.S. same-store sales forecast for Domino’s by +260 basis points, to +10.5%. As of this writing, sell-side consensus (according to Consensus Metrix) is at +9.4%. Our increased forecast represents factors including: (1) quick-service delivery specialists still seem to be more appreciated by consumers in general, (2) stimulus-related consumer spending in January and in March, and (3) the return of the March Madness college basketball tournament — generating TV ratings on par with 2019 levels, unlike many other major sports games/events — seems to be driving demand for pizza delivery.

Earlier today, Domino’s reported Q4 EPS of $3.85, above our $3.50 projection, but a little short of sell-side consensus of $3.88 (according to Consensus Metrix). The $3.85 figure includes a +39 cent boost from 2020’s extra, 53rd accounting week. The next 53-week fiscal year for Domino’s will be 2026.

Domino’s plans to release its Q4 2020 earnings before the market open on Thursday, February 25th. How do DPZ shares tend to trade heading into earnings, and on the day of an earnings release?

With this report, we update our data-driven Kalinowski Quick-Service Pizza Index for Q4E to +12.1%. This figure is based on our latest proprietary checks/data as regards same-store sales performance for this segment during October, November, and December. We believe that December same-store sales were likely the best month of the quarter, while October was helped by arguably the busiest Halloween ever for pizza delivery/carryout.

Both Domino’s (DPZ; Buy, $392.57) and Papa John’s (PZZA; Buy, $80.36) begin lapping very difficult year-over-year domestic same-store sales comparisons in Q2 2021. What can we learn about the recent history of restaurant concepts that have lapped difficult comparisons, in this regard? And, what might Popeyes Louisiana Kitchen (owned by Restaurant Brands International [QSR; Not Rated]) teach us about what to expect for Domino’s and Papa John’s domestic same-store sales in 2021? Our bottom line is that Domino’s and Papa John’s could end up lapping these tough numbers better than the Street currently anticipates.

Looking at unit closures announced and planned by large restaurant chains, and comparing these to unit closures from mom-and-pops/independents, goes to show just how large a market-share shift is going on in the U.S. restaurant industry. We look for most, if not all, of this market-share shift in favor of large concepts to persist in the years after 2020.

Earlier today, Domino’s reported that its Q3 EPS came to $2.49, short of our $2.79 forecast and sell-side consensus (according to Consensus Metrix) of $2.78 (which had been at $2.73 as recently as eight days ago).

With this report, we update our data-driven Kalinowski Quick-Service Pizza Index for Q3E to +13.6%. This figure is based on our latest proprietary checks/data as regards same-store sales performance for this segment during July, August, and September.

Domino’s (DPZ; Buy, $423.46) plans to report its third-quarter earnings before the market open on Thursday, October 8th. Ahead of this, we raise our Q3E same-store sales forecasts for the U.S. (by +100 basis points, to +15.0%; according to Consensus Metrix sell-side consensus is at +13.4%) and International (by +50 basis points, to +5.0%; consensus is at +2.1%).

With this report, we introduce our quarterly EPS estimates for Domino’s (DPZ; Buy, $376.32) for 2021E as follows:
Q1E: $2.85
Q2E: $2.95
Q3E: $3.00
Q4E: $4.25

Less than a week ago, we raised our Q3E same-store sales and EPS estimates in our report “DPZ: Updating Our Forecasts” (today’s report is best read in conjunction with that report). With this report, we further take up our Q3E same-store sales projection for Domino’s International business, by +150 basis points to +4.5%. Sellside consensus (according to Consensus Metrix) is at +2.0% as of this writing.

With this report, we raise our Q3E same-store sales forecasts and EPS estimate for Domino’s. For U.S. same-store sales, we move up our Q3E projection by +200 basis points, to +14.0% (above current sell-side consensus of +12.1%, according to Consensus Metrix). We believe that U.S. quick-service pizza sector same-store sales momentum coming off of an exceptional Q2 has been retained to a greater degree than anticipated so far into Q3, and it’s likely Domino’s — the largest pizza concept in the U.S. — is participating in this trend.

Earlier today, Domino’s (DPZ; Buy, $408.48) reported Q2 EPS of $2.99, well ahead of our $2.15 forecast and sell-side consensus (according to Consensus Metrix) of $2.27. Even excluding a better-than-expected tax rate (4.7% actual vs. our 19.4% estimate and consensus of 17.8%), Q2 EPS would have been +37 cents better than our forecast and +30 cents better than consensus. Better-than-expected G&A/ Revenues (9.6% actual vs. our 11.5% estimate and consensus of 10.6%) accounted for +23 cents of the EPS beat relative to consensus.

Is it possible the Street is underestimating sales and market-share opportunities in 2021 for the larger publicly-traded quick-service pizza concepts? We believe that Domino’s (DPZ; Buy, $374.09) and Papa John’s (PZZA; Buy, $83.66) both remain well-positioned for the future for multiple reasons, but this particular factor may be underappreciated. Incidentally, it’s possible for Pizza Hut (owned by Yum Brands [YUM; Neutral, $86.55]) to benefit from the same issue, although Pizza Hut will over the short-to-medium term likely have to deal with net unit closures, limiting to some meaningful degree its opportunity to take market share from other pizza outlets’ closures.

After yesterday’s (Tuesday’s) market close, Domino’s (DPZ; Buy, $360.16) provided a business update. Following our May 12th report in which we raised our Q2E samestore sales forecast to a sell-side high of +8.6% (it is still the high sell-side forecast as of 4 PM Eastern time yesterday, according to Consensus Metrix), Domino’s comments that its April 20-May 17 U.S. same-store sales rose by +20.9%, placing Q2-to-date (through May 17th) at +14.0%.

With this report, we upgrade our rating on the shares of Domino’s (DPZ) to Buy (from Neutral). Our upgrade is based on multiple factors, including: (1) we raise our Q2E U.S. same-store sales forecast by +190 basis points, to +8.6% — not only above sellside consensus (according to Consensus Metrix) of +6.8%, but also the new “highon-the-sell-side” forecast, (2) this summer’s new U.S. product launch could prove to be a hit, (3) while we are not modeling a meaningful international sales rebound, it could happen as more countries come back on line with their operations (for example, as of late April, only about 70% of Domino’s France stores were back open), (4) Domino’s company-owned stores (which represent about 2% of the worldwide store base, but which we calculate generate approximately 10%-11% of worldwide operating profits) should see their operating margins helped by lower cheese costs over Q2E-Q4E, and (5) while we are not predicting another massive shutdown of stores/lockdown orders/etc. for 6-12 months from now, if COVID-19 issues lead to such a circumstance several months from now — particularly over winter 2020-21; winters are relatively friendlier to respiratory viruses — Domino’s delivery & carryout focused business model should be more resistant than nearly all other business models in the restaurant industry.

Earlier today, Domino’s (DPZ; Neutral, $364.00) reported Q1 EPS of $3.07, well above our $2.35 forecasts and sell-side consensus (according to Consensus Metrix) of $2.32. The earnings beat is largely due to tax rate, which came in at -3.7% (i.e., a helpful tax rate) vs. our 19.0% forecast and consensus of 18.7%. If the Q1 tax rate had been 19.0% (and nothing else in the Q1 income statement was changed), we estimate that Q1 EPS would have been about $2.40 — an earnings beat, but nevertheless not quite as good as what appeared at first glance. On today’s conference call, management commented that the Q1 tax rate reflected “tax benefits on equitybased compensation,” and that it anticipates continued volatility in the tax rate going forward.

We adjust our U.S. blended (company-owned and franchised combined) same-store sales estimates for Domino’s (DPZ; Neutral) as follows:
Q1E 2020: down by -190 basis points to an actual of +1.6%
Q2E 2020: down by -240 basis points to +0.6%
Q3E 2020: down by -190 basis points to +2.1%
Q4E 2020: stays at +3.5%
Full-year 2020E: down by -170 basis points to +2.0%
Full-year 2021E: up by +50 basis points to +3.5%

Earlier today, Domino’s (DPZ; Buy, $365.12) reported adjusted Q4 EPS of $3.13, coming in ahead of our $2.99 forecast and sell-side consensus (according to Consensus Metrix) of $2.97.

Reminder! Institutional investors are invited to join Kalinowski Equity Research as it hosts a group lunch with Domino’s management in Orlando, Florida (during ICR Conference 2020) on Tuesday, January 14th.

Institutional investors are invited to join Kalinowski Equity Research as it hosts a lunch with Domino’s management in Orlando, Florida (during ICR Conference 2020) on Tuesday, January 14th.

Earlier today, Domino’s (DPZ; Neutral) reported Q3 EPS of $2.05, a little short of our $2.09 forecast and sell-side consensus of $2.07. Tax rate (21.7% actual vs. our 20.0% projection) accounts for the difference between our EPS estimate and the actual.

Earlier today, Domino’s (DPZ; Neutral) reported Q3 EPS of $2.05, a little short of our $2.09 forecast and sell-side consensus of $2.07. Tax rate (21.7% actual vs. our 20.0% projection) accounts for the difference between our EPS estimate and the actual.

With this report, we introduce our quarterly EPS estimates for 2020E for Domino’s (DPZ; Neutral) as follows: (1) Q1E $2.40, (2) Q2E $2.32, (3) Q3E $2.40, and (4) Q4E $3.58. These quarterlies sum to our unchanged full-year 2020E EPS forecast of $10.70. Please keep in mind that 2020 is a 53-week fiscal year for Domino’s.