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Domino’s Stock Rallies on Strong 1Q18 Earnings

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1Q18 performance

Domino’s Pizza (DPZ) posted its 1Q18 earnings today with adjusted EPS (earnings per share) of $2.0 on revenues of $785.4 million. The company outperformed both analysts’ revenue expectation of $691.9 million and their EPS expectation of $1.77. Also, the company posted strong domestic SSSG of 8.3%, versus analysts’ expectation of 4.7%. The strong sales and earnings appear to have increased investors’ confidence, leading to a rise of over 8.0% in Domino’s stock price.

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Year-over-year revenue growth

Year-over-year, Domino’s Pizza’s posted revenue growth of 25.8% in 1Q18. The revenue growth was driven by the addition of new restaurants, positive SSSG, and the adoption of a new accounting standard, which recognizes the contributions of $82.2 million from domestic franchisees to Domino’s National Advertising Fund as domestic franchise advertising revenues.

Compared to 1Q17, the company operated 964 more franchised restaurants and two more company-owned restaurants in 1Q18. The company posted SSSG of 6.4% in domestic company-owned restaurants, 8.4% in domestic franchised restaurants, and 5.0% in international restaurants.

EPS growth

Compared to 1Q17, Domino’s EPS grew 58.7% in 1Q18. The EPS growth was driven by revenue growth, the expansion of net margin, and share repurchases. The company’s net margin expanded from 10.0% in 1Q17 to 11.3% due to a lower cost of sales, G&A (general and administrative) expenses, and interest expenses. In last four quarters, from the beginning of 2Q17 to the end of 1Q18, the company repurchased approximately $1.1 billion worth of shares.

You’ll soon find more detailed analysis of the 1Q18 results on our Consumer Staples page.

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