uploads/2018/10/3-15.jpg

Analysts Expect Domino’s Pizza’s EPS to Rise in Q3 2018

By

Updated

Analyst expectations

For the third quarter of 2018, analysts expect Domino’s Pizza’s (DPZ) EPS to rise 37.5% to $1.75 compared to $1.27 in Q3 2017. EPS growth will most likely be driven by revenue growth, a lower effective tax rate, and share repurchases. However, some of the increase could be offset by a decline in its EBIT (earnings before interest and tax) margin.

Analysts are expecting Domino’s effective tax rate to fall from 33.6% in the third quarter of 2017 to 21.6% in the third quarter of 2018. From the beginning of the fourth quarter of 2017 to the end of the second quarter of 2018, Domino’s repurchased ~2.3 million shares at a cost of ~$370 million. At the end of the second quarter of 2017, it had ~$429.9 million in its share repurchase program.

Analysts expect the company’s EBIT margin to fall from 18.3% to 16.6% due to the adoption of a new accounting standard and higher G&A (general and administrative) expenses.

Article continues below advertisement

Peer comparisons and outlook

For the third quarter, analysts expect Yum! Brands (YUM) to post EPS growth of 21.9%. They expect Papa John’s (PZZA) EPS to fall 63.4%.

For 2018, analysts expect Domino’s Pizza to post EPS of $8.32, which represents a growth of 40.8% from $5.91 in 2017.

Dividends

On July 18, Domino’s Pizza announced a quarterly dividend of $0.55 per share, which represents an annualized payout of $2.20. As of October 10, its dividend yield was 0.8% with the stock trading at $274.92. That same day, the dividend yields for Yum! Brands and Papa John’s were 1.61% and 1.67%, respectively.

In the next and final part of this series, we’ll look at analyst recommendations for DPZ stock.

Advertisement

More From Market Realist