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Could Domino’s Stock Keep Climbing?

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During the first half of 2018, Domino’s Pizza (DPZ) posted revenue growth of 24.9% and EPS growth of 48.8%. Its strong sales and EPS growth boosted its stock, which has risen 53.9% this year.

Revenue growth

In the first half of 2018, Domino’s revenue grew YoY (year-over-year) to $1.56 billion from $1.25 billion, driven by new accounting standards, the addition of 905 restaurants, and positive SSSG (same-store sales growth). The new accounting standards boosted the company’s revenue by $163.1 million.

The company posted domestic SSSG of 7.6% and international SSSG of 4.4% in H1 2018. In the domestic market, Domino’s saw 5.8% SSSG at company-owned restaurants, and 7.7% SSSG at franchised restaurants.

EPS growth

In the first half of 2018, Domino’s adjusted EPS grew 48.8% to $3.84, driven by revenue growth, net margin expansion, and share repurchases. The company’s net margins expanded from 10.2% in the first half of 2017 to 10.8%, driven by lower sales costs, general and administrative expenses, and tax, and partially offset by new accounting standards.

Outlook

In the next four quarters, analysts expect Domino’s revenue to grow 16.6% YoY to $3.10 billion, and its EPS to rise 19.9% YoY to $8.63. Next, we’ll look at Yum! Brands’ (YUM) performance in the first half of 2018.

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