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Analysts Optimistic about Domino’s Earnings in Next 4 Quarters

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EPS estimates

For the next four quarters, analysts are expecting Domino’s Pizza (DPZ) to post EPS (earnings per share) of $5.60, which represents a rise of 19.7% from $4.67 in the corresponding quarters of the previous year.

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EPS growth

Domino’s EPS growth is expected to be driven by revenue growth, expansion of its EBIT (earnings before interest and tax) margin, and share repurchases.

Analysts are expecting Domin’s EBIT margin to rise from 18.4% to 18.8% in the next four quarters. The sales leverage from positive same-store sales growth is expected to offset the increase in labor expenses and G&A (general and administrative) expenses to expand Domino’s EBIT margins. The increased investment in technological initiatives and e-commerce is expected to raise its G&A expenses.

By the end of 1Q17, the company had approximately $136.4 million in its share repurchase program. Share repurchases lower the number of shares outstanding, thus boosting the company’s earnings. From the above graph, you can see that the company has outperformed analyst estimates in all five quarters. When this happens, the share price of Domino’s tends to rise.

Peer comparisons

For the next four quarters, analysts are expecting Papa John’s (PZZA) to post EPS growth of 11.7%. They expect EPS for Yum! Brands (YUM) to fall 7.0%.

Next, we’ll look at the valuation multiple for Domino’s Pizza.

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