Stock Story -
Fast-food pizza chain Domino’s (NYSE:DPZ) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 5.9% year on year to $1.08 billion. It made a GAAP profit of $3.58 per share, improving from its profit of $2.93 per share in the same quarter last year.
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Domino's (DPZ) Q1 CY2024 Highlights:
- Revenue: $1.08 billion vs analyst estimates of $1.08 billion (small beat)
- EPS: $3.58 vs analyst estimates of $3.40 (5.4% beat)
- Gross Margin (GAAP): 28.7%, up from 26.6% in the same quarter last year
- Free Cash Flow of $103.3 million, down 15.8% from the previous quarter
- Same-Store Sales were up 5.6% year on year
- Store Locations: 20,755 at quarter end, increasing by 747 over the last 12 months
- Market Capitalization: $17.38 billion
Founded by two brothers in Michigan, Domino’s (NYSE:DPZ) is a globally recognized pizza chain known for its creative marketing and fast delivery.
Traditional Fast FoodTraditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.
Sales GrowthDomino's is one of the larger restaurant chains in the industry and benefits from a strong brand, giving it customer mindshare and influence over purchasing decisions.
As you can see below, the company's annualized revenue growth rate of 5.4% over the last five years was weak , but to its credit, it opened new restaurants and grew sales at existing, established dining locations.
This quarter, Domino's grew its revenue by 5.9% year on year, and its $1.08 billion in revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 7.4% over the next 12 months, an acceleration from this quarter.
Same-Store SalesA company's same-store sales growth shows the year-on-year change in sales for its restaurants that have been open for at least a year, give or take. This is a key performance indicator because it measures organic growth and demand.
Domino's demand within its existing restaurants has been relatively stable over the last eight quarters but fallen behind the broader sector. On average, the company's same-store sales have grown by 1.5% year on year. With positive same-store sales growth amid an increasing number of restaurants, Domino's is reaching more diners and growing sales.
In the latest quarter, Domino's same-store sales rose 5.6% year on year. This growth was an acceleration from the 2.4% year-on-year increase it posted 12 months ago, which is always an encouraging sign.
Key Takeaways from Domino's Q1 Results It was good to see Domino's beat analysts' revenue expectations this quarter. We were also happy its EPS narrowly outperformed Wall Street's estimates. The company maintained its long-term guidance. Overall, this was a solid quarter for Domino's. The stock is up 4.3% after reporting and currently trades at $521.11 per share.