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Domino's Pizza Inc - Stock Quote DPZ

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Morningstar's Domino's Pizza Inc Stock Analysis

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Domino's Fails to Deliver in the First Quarter, but Selloff Looks Overblown. Shares Slightly Cheap

Sean Dunlop Equity Analyst

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.

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Domino's Pizza Inc's Company Profile

Business Description

Domino’s Pizza is a restaurant operator and franchiser with nearly 19,000 global stores across more than 90 international markets at the end of 2021. The firm generates revenue through the sales of pizza, wings, salads, and sandwiches at company-owned stores, royalty and marketing contributions from franchise-operated stores, and its network of 25 domestic (and five Canadian) dough manufacturing and supply chain facilities, which centralize purchasing, preparation, and last-mile delivery for the firm's U.S. and Canadian restaurants. With roughly $17.7 billion in 2021 system sales, Domino’s is the largest player in the global pizza market, ahead of Pizza Hut, Papa John’s, and Little Caesars.

Contact
30 Frank Lloyd Wright Drive
Ann Arbor, MI, 48105
T +1 734 930-3030
Sector Consumer Cyclical
Industry Restaurants
Most Recent Earnings Mar 31, 2022
Fiscal Year End Jan 1, 2023
Stock Type Cyclical
Employees 13,500

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