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Domino’s Pizza: Will It Deliver Strong EPS in 1Q16?

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Earnings per share

So far in this series, we discussed Domino’s Pizza’s (DPZ) estimated revenue, revenue sources, and estimated EBIT (earnings before interest and tax) margins. Now, let’s discuss analysts’ EPS (earnings per share) estimates and management’s guidance for fiscal 1Q16.

Will Domino’s Pizza Deliver Strong Earnings per Share in 1Q16?

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1Q16 expectations

In the last four quarters, Domino’s Pizza, which forms 0.46% of the holdings of the SPDR S&P MIDCAP 400 ETF (MDY), beat the expectations three times. When the company beats the expectations, the share price tends to rise. In 1Q16, analysts are expecting Domino’s to post an EPS of $0.98. This represents 20.5% growth. The increased revenue and EBIT margin expansion are expected to drive the EPS growth in 1Q16. The share purchases in the last 12 months will also contribute to the EPS growth. We’ll discuss share repurchases in the next part. Share repurchases will reduce the number of shares outstanding. It will increase the EPS.

Peer comparison

In 2016, analysts are expecting Domino’s peers such as Papa John’s (PZZA), Yum! Brands (YUM), and Starbucks (SBUX) to post EPS growth of 14.5%, 15%, and 18.2%.

2016 outlook

The growth in expected revenue, expansion of EBIT margins, and share repurchase programs should boost Domino’s Pizza’s 2016 EPS to $4.2—growth of 19.1% from $3.6 in 2015.

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