Domino's Pizza (DPZ 255.50, -22.99, -8.26%) is trading lower today after reporting
disappointing Q4 earnings this morning. Non-GAAP EPS rose 25% yr/yr to $2.62,
which was below market expectations. Revenue rose 21.4% yr/yr to $1.08 bln, which
was in-line with market expectations. For the full year, non-GAAP EPS grew a
robust 42% to $8.42. That is some sizeable growth on a pretty large base. You
do not usually see that.
In terms of domestic same store sales, they came in at a robust +5.6% (+3.6% company-owned, +5.7% franchise) while international comps came in at +2.4% (this excludes FX impact). These were good comps considering DPZ was lapping some decent comps in 4Q17 at +4.2% for domestic and +2.5% for international. The Q4 comps marked the 100th consecutive quarter of international comp growth and the 31st consecutive quarter of US comp growth. However, the +5.6% comp was below the +6.3% comp achieved in Q3.
Since there is not a lot of color provided in the press release, you'll have to wait for the call which starts at 10am ET today. So, it's not entirely clear why DPZ missed on EPS. Generally, when sales are in-line and there and EPS miss, it means margins were lower than expected. Perhaps higher food costs and FX may have had an impact, but it's not entirely clear yet.
Also, the comp number may be weighing on the stock a bit also. The +5.6% comp was good, but it was below the +6.3% comp achieved in Q3. Hopefully, that number turns up again in 1Q19.
Another issue is that the stock had run quite a bit in recent weeks, moving up from around $240 in early January to above $290 in early February before it pulled back a bit last week. Perhaps investors had high expectations going into this report and the EPS miss and comp number is weighing on the stock a bit.
- OUR VIEW
- LEARNING CENTER