Has Domino’s Stock Price Bottomed Out?

As of August 28, 2017, Domino’s Pizza (DPZ) was trading at $178.76, which represents a fall of 16.5% since the announcement of its 2Q17 earnings on July 25, 2017.

In 2Q17, Domino’s posted adjusted EPS (earnings per share) of $1.32 on revenue of $628.6 million. Analysts were expecting the company to post EPS of $1.23 on revenue of $614.4 million. Despite posting better-than-expected 2Q17 earnings, the company saw its stock price fall due to rising competition in delivery services, and lower SSSG (same-store sales growth) in international markets.

With companies such as McDonald’s (MCD), Chipotle Mexican Grill (CMG), and Buffalo Wild Wings (BWLD) beginning to test delivery services, customers will have more ordering choices. The entry of new players into delivery services could negatively affect Domino’s revenue. Also, the slowing down of Domino’s SSSG in international markets has made investors skeptical of the company’s future earnings, dragging down its stock price.

Despite the recent fall, the company’s stock price has returned 12.3% since the beginning of 2017. During the same period, peers Papa John’s (PZZA) and Yum! Brands (YUM) have returned -10.0% and 20.3%, respectively.

The S&P 500 (SPX) and the Consumer Discretionary Select Sector SPDR ETF (XLY) have returned 9.2% and 8.9%, respectively. XLY invests 12.7% of its holdings in restaurants and travel companies.

In this series, we’ll look at analysts’ revenue and EPS expectations for Domino’s for the next four quarters. We’ll also cover the company’s valuation and analysts’ recommendations. Let’s start by looking at analysts’ revenue estimates.