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; Buy) reported second-quarter EPS of $2.19, ahead of our $2.04 forecast and sell-side consensus (according to Consensus Metrix) of $2.02. However, a lower-than-projected tax rate of 12.9% (versus our 20.5% projection and consensus of 19.8%) helped EPS by about $0.20 relative to our forecast. On the other hand, EPS was hampered by about $0.04 related to a loss on the sale of 59 New York City area stores. Taking the tax-rate and refranchising loss issues out, Q2 EPS would have been one cent below our forecast and one cent above sell-side consensus.
We recently met with Domino’s (DPZ; Buy) — including CEO Ritch Allison, Executive Vice President and CFO Jeff Lawrence, and Director of Investor Relations Chris Brandon — in Ann Arbor, Michigan. We thank them for their time! Topics of interest that were asked about include Domino’s plans to fight off delivery aggregators and other competition (“The good news is, the strategies to play offense against the aggregators are exactly the same as the strategies to play offense against the traditional competition.”), how crisis (such as the possibility of higher protein costs given the risks brought about by African swine fever) could be a net positive for Domino’s, and Domino’s current thoughts regarding plant-based proteins (“We don’t have any imminent plans in place, but we have to stay on top of it and see what consumers are going to do.” Management said that when they have tried some of the latest plant-based offerings, the “flavor and texture are shockingly close” to real beef). We reiterate our Buy rating on DPZ, and note the following: