Domino's Pizza Inc.
) reported second quarter 2012 adjusted earnings of 47 cents per
share, beating the Zacks Consensus Estimate by a penny. This also
compared favorably with the year-ago adjusted earnings of 40 cents.
On a reported basis, earnings came in at 47 cents per share
compared with 40 cents in the year-ago quarter.
The year-over-year earnings growth was fueled by same-store sales
growth (both on national and international fronts), increased
international units, higher share repurchase activity and a hike in
Inside the Headline Numbers
Total revenue dropped 2.3% year over year to $376.1 million and
also missed the Zacks Consensus Estimate of $387 million. Revenue
was hurt by lower company-owned store revenues, reduced volumes of
domestic supply chain and negative impact of foreign currency
fluctuations, partially offset by higher domestic and international
same-store revenues and international unit growth.
During the quarter, the company's overall domestic same-store sales
moved up 1.7% with company-owned units and franchises rising 0.3%
and 1.9%, respectively. Same-store sales grew 5.7% in the
international market, signifying the 74th consecutive quarter of
same-store sales increase in the region. Global retail sales were
up 4.3% or 7.9% (excluding foreign currency impact).
The company's operating margin expanded 140 basis points (bps) to
30.1% in the reported quarter. The average cheese block price in
the second quarter decreased to $1.52 per pound from $1.68 a year
ago. The decrease in cheese price, one of the main food
ingredients' of the company, resulted in minor decrease in market
basket during the quarter.
During the reported quarter, Domino's opened 8 franchised units and
closed 5 franchised stores, bringing the total domestic store count
Internationally, the company opened 120 stores and closed 9 stores.
The company currently operates 5,023 international stores.
At the end of the reported quarter, Domino's Pizza had cash and
cash equivalents of $10.8 million with long-term debt (less current
portion) of $1,548.6 million.
During the reported quarter, the company repurchased and retired
1,146,497 shares for a total cost of around $36.9 million.
Subsequent to end of the quarter, the Company repurchased and
retired an additional 129,218 shares for a total cost of around
DOMINOS PIZZA (DPZ): Free Stock Analysis Report
PAPA JOHNS INTL (PZZA): Free Stock Analysis
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In the long term, management continues to expect domestic
same-store sales growth of more than 1%--3% range. On the food cost
front, Domino's expect overall market basket for 2012 to increase
1% to 2% year over year, due to fixed pricing on 35% to 40% of
total expected purchases in 2012.
Store level statistics of Domino's Pizza are strong and remains a
significant growth driver. Moreover, the company's growth model
does not involve substantial investments as it concentrates on the
master franchise structure. Domino's Pizza remains optimistic about
its domestic and international operations with respect to sales and
Based on strong earnings, same-store sales increase and unit
growth, we expect the estimates to go up in the coming days. The
Zacks Consensus Estimates for 2012 and 2013 are pegged at $1.93 and
Ann Arbor, Michigan-based Domino's competes with the likes of
Papa John's International Inc.
). The company carries a Zacks #3 Rank, implying a short-term Hold
rating. We also reiterate our long-term Neutral recommendation on