DOMINO’S PIZZA (New York symbol DPZ; www.dominos.com) is the world’s largest chain of pizza stores that offer takeout and delivery. It operates 10,440 outlets in the U.S. and over 70 other countries. Franchisees run most of these stores.
The company’s earnings per share rose 21.3% in the quarter ended June 16, 2013, to $0.57 from $0.47 a year earlier. The latest figure beat the consensus estimate of $0.56. Sales gained 10.0%, to $414.0 million from $376.1 million. That also exceeded the consensus estimate of $405.1 million. Same-store sales rose 5.8% internationally and 6.7% in the U.S.
Domino’s continues to boost its sales by aggressively promoting its new pizza recipes. It’s also profiting by moving into ordering online and through software applications, or apps, on smartphones.
Stock advice: New store in Bangkok latest step in Domino’s overseas expansion
Domino’s still has lots of growth potential overseas. For example, earlier this year it opened its first store in Thailand, in the city of Bangkok, and plans to add more outlets in the country in the next few years.
Pizza has proven hugely popular globally, and it’s easy for store operators to adapt to local tastes by simply offering different toppings. For example, in Thailand, several pizzas will include local hot red chilies.
The company’s long-term debt is still high, at $1.5 billion, or 43% of its market cap. However, it continues to steadily pay down its debt, and it has no major loans coming due until 2019.
Domino’s began paying dividends in March 2013 at a rate of $0.20 per quarter. The shares yield 1.3%. The stock has jumped over 70% for us in the past year.
In the latest edition of Stock Pickers Digest, we look at whether Domino’s can keep growing its profits and whether the stock can keep rising. We conclude with our clear buy-hold-sell advice on the stock.
COMMENTS PLEASE—Share your investment knowledge and opinions with fellow TSINetwork.ca members
Fast food stocks like Domino’s and McDonald’s are growing overseas as a larger and more affluent middle class develops. This would seem to give those stocks almost unlimited opportunities for growth, but do you see any factors that could hinder their growth in international markets?
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