Domino's Pizza's Soft US Sales Offset By Strong Company Margins, Says Analyst

Stephens & Co analyst Joshua Long reiterated an Equal-Weight rating on the shares of Domino's Pizza Inc DPZ with a price target of $365.

Domino's reported 2Q23 U.S. same-store sales growth of +0.1% versus Street estimates of +0.4%.

Total revenues were $1.02 billion versus. Street estimates of $1.07 billion and adjusted EPS of $3.08 beat the street estimates of $3.05. Company-owned operating margins of 18.6% beat Street estimates of 16.9%.

The analyst said the recent Third Party announcement has been highly requested among franchisees and investors, but expect further brand/menu innovation will be required for incremental top-line.

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The analyst will look forward to operational green-shoots regarding the "Summer of Service" brand-building initiative supporting the better-than-expected company-owned same-store sales results in the conference call.

The analyst believes management's redesigned digital experience could be another next step highlighted at the December 7 analyst day.

The analyst is focused on the current macro backdrop and any impact it has on the company's core delivery channel as well as competitive threats from frozen pizza sold in grocery& c-stores.

Price Action: DPZ shares are trading higher by 1.56% at $391.43 on the last check Monday.