Domino's Analysts Cheer Its US Comps; Seek More Transparency On Top-Line, Demand Boost

Domino's Pizza Inc DPZ reported third-quarter FY22 sales growth of 7.1% year-on-year to $1.068 billion, marginally beating the consensus of $1.06 billion.
EPS of $2.79 missed the consensus of $2.97.
Stephens analyst Joshua Long reiterated an Equal-Weight on Domino's Pizza and a $368 price target.
DPZ's Q3 U.S. same-store sales growth beat his and Street's estimates. However, the international comps missed the forecast. The lapping of the VAT holiday affected the international comps.
Total revenues were in line with the estimates.
The company-owned operating margin and adjusted EPS missed the consensus.
On the development side, Domino's opened 24 and 201 net new units in the U.S. and internationally, below the estimates.
Finally, after the closing of Q3, the company sold 114 U.S. company-owned stores in Arizona and Utah for $41.1 million.
The revised FY22 guidance reflected FX headwinds, G&A, and capex.
On the conference call, the analyst will look for commentary regarding indications of top-line momentum, operational and strategic adjustments, and a discussion of plans to stimulate demand.
Cowen analyst Andrew Charles reiterated a Market Perform and $362 price target.
While he was pleased with better-than-expected U.S. comps as investors braced for a miss, net restaurant growth & EPS missed while international comps were in between his estimate & consensus.
On the call, he will monitor greater open-mindedness to adopt 3rd party delivery though this seems unlikely given 90 bps of sequential acceleration in U.S. comps on a 3-year basis.
He will also look for any commentary around the Q3 exit rate of sales, given investor concern on a Boost Week between 8/15-8/21, shortly followed by an "Inflation Relief Deal" launched on 9/6.
Domino's noted that the international decline was partially driven by a VAT holiday in the U.K.
He noted fortressing activity in India, DPZ's most significant international market by store counts, likely also weighed on international comps.
Price Action: DPZ shares are trading higher by 10.76% at $334.21 on the last check Thursday.
Photo Via Wikimedia Commons

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