On Monday, Jefferies updated its outlook on Domino's Pizza (NYSE:DPZ), increasing the stock price target to $512 from the previous $480 while maintaining a Hold rating on the stock. The adjustment follows Domino's stronger-than-expected same-store sales (SSS) growth of 5.6%, which surpassed the consensus estimate of 4.2%.
The company's performance was buoyed by robust carryout and delivery demand, as well as ongoing benefits from partnerships like Uber (NYSE:UBER) and customer loyalty rewards programs.
The analyst noted that while a slight moderation in same-store sales is anticipated in the second quarter due to the waning impact of the Emergency Pizza promotion, mechanisms are in place that could drive improvement in the second half of the year. Moreover, Domino's reported operational margin improvements and a lower tax rate, contributing to an earnings per share (EPS) beat.
Despite these positive results, the full-year margin outlook remains unchanged, as does the long-term guidance. The analyst suggested that although there could be future upside, this potential seems to be largely factored into the current stock price. As a result, the firm has reiterated its Hold rating but adjusted the price target upwards to reflect the recent performance and near-term expectations.
InvestingPro Insights
Following the recent update by Jefferies on Domino's Pizza, investors may find additional insights from InvestingPro. Notably, the company has been consistent in rewarding shareholders, having raised its dividend for 10 consecutive years and maintained dividend payments for 13 consecutive years.
This consistency is a testament to Domino's financial stability and commitment to returning value to its shareholders. Moreover, analysts predict the company will remain profitable this year, which is supported by a strong return over the last year and robust performance over the last three months, as indicated by a 15.53% 3-month price total return.
InvestingPro data highlights a market capitalization of $18.31 billion and a high Price/Earnings (P/E) ratio of 35.6, which suggests that the stock is trading at a premium relative to its earnings. While the company's revenue showed a slight decline of 1.27% over the last twelve months as of Q1 2023, Domino's has a solid gross profit margin of 28.0% and an operating income margin of 18.3%, reflecting efficient operations and profitability.
For investors seeking more comprehensive analysis, there are additional InvestingPro Tips available that delve into the company's valuation multiples and liquidity position. With the use of the promo code PRONEWS24, investors can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription to access these valuable insights. Currently, there are 14 additional tips listed in InvestingPro for Domino's Pizza, which can provide a deeper understanding of the company's financial health and stock performance.
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