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Domino’s Pizza Beats Earnings Estimate, Misses on Revenue

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First-quarter performance

On April 24, Domino’s Pizza (DPZ) posted its first-quarter earnings results. The company posted adjusted EPS of $2.20, outperforming analysts’ estimate of $2.09. However, its revenue for the quarter came in at $836 million, falling short of analysts’ estimate of $849.6 million. Domino’s SSSG (same-store sales growth) in both domestic and international markets fell below analysts’ expectations.

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Revenue growth

YoY (year-over-year), Domino’s revenue rose 6.4%. Increases from the company’s supply chain, its company-owned restaurants, and its franchised restaurants in both domestic and international markets drove its revenue during the quarter. However, some of the increase in its revenue was offset by an unfavorable currency translation.

During the quarter, Domino’s posted SSSG of 2.1% in its domestic company-owned restaurants, while SSSG in its domestic franchised restaurants stood at 4.1%. In international markets, the company posted SSSG of 1.8%. Compared to the first quarter of 2018, the unit count of Domino’s company-owned restaurants had fallen by five to 392 as of the end of the first quarter of 2019, while the unit count of its franchised restaurants had increased by 1,153 units during the same period.

EPS growth

During the quarter, Domino’s EPS rose 10% YoY. Its EPS growth was driven by revenue growth, higher operating margins, and share repurchases partially offset by increased interest expenses and a higher effective tax rate.

The company’s operating margin expanded from 38.2% in the first quarter of 2018 to 38.6% in the first quarter of 2019. The company’s effective tax rate stood at 15.1% in the quarter compared to 14.3% in the corresponding quarter of the previous year. In the last four quarters, Domino’s has repurchased ~1.97 million shares for ~$498 million.

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