Analyst Note
| Sean Dunlop |Wide-moat Domino's posted disappointing first-quarter results, with $2.50 EPS falling well shy of our $2.97 forecast, despite $1.0 billion in sales meeting our expectations. Restaurant margins were a big catalyst, falling by a striking 3.8 points in the U.S. on operating deleverage and ballooning input costs, while delivery aggregator commentary was intriguing, considering outbound CEO Ritch Allison's longstanding reluctance to consider aggregator partnerships. As we balance a tougher than expected cost environment, a protracted margin recovery, and near-term sales weakness, we expect to lower our $416 fair value estimate by a mid-single-digit percentage. Shares look slightly cheap.