DPZ Hits 52-Week High on Solid 1Q - Analyst Blog

Shares of Domino's Pizza Inc. ( DPZ ) touched a 52-week high of $60.69 during the trading session on Jun 4 and eventually closed at $60.18. The closing share price of this pizza chain has been trending higher since it released its first-quarter 2013 earnings on Apr 30, 2013.

The adjusted closing price of this restaurant company on Jun 4, 2013, represented a staggering one-year return of about 102.8%. Average volume of shares traded over the last three months stands at approximately 1,227K.

We believe, despite hitting its 52-week high, this Zacks Rank #2 (Buy) stock has plenty of upside left, given strong estimate revisions over the last 60 days and expected long-term earnings growth rate of 14.3%.

Growth Drivers

Impressive first-quarter 2013 results - including an earnings surprise of 5.4%, sales surprise of 1.1%, a solid 25.5% jump in adjusted earnings per share and 8.6% year-over-year increase in revenues were the key growth drivers.

Higher revenues, lower interest expense, slightly lower tax rate and share repurchases pushed up earnings during the quarter. Total revenue climbed 8.6% year over year to $417.6 million on the back of higher comparable restaurant sales growth and unit expansion.

An operating margin expansion of 130 basis points driven by better product-mix was also a high point in its financial results. Moreover, Domino's has now delivered positive earnings surprises in the last 4 quarters with an average beat of 5.22%.

A strong overseas presence, traction in digital ordering and its foray into the Pan Pizza category will be a tailwind for the company's domestic business.

Upward Trend in Estimate Revisions

Over the last 60 days, 7 of the 9 estimates for 2013 have been revised upward, lifting the Zacks Consensus Estimate for earnings per share by 3.9% to $2.40. For 2014, 6 of the 9 estimates moved north, helping the Zacks Consensus Estimate advance 3.4% to $2.73 per share.

Other Stocks to Consider

Others players in the same industry, which look attractive at the current levels include The AFC Enterprises Inc. ( AFCE ), Brinker International Inc. ( EAT ) and Burger King Worldwide Inc. ( BKW ) all carrying a Zacks Rank #2 (Buy).

AFC ENTERPRISES (AFCE): Free Stock Analysis Report

BURGER KING WWD (BKW): Free Stock Analysis Report

DOMINOS PIZZA (DPZ): Free Stock Analysis Report

BRINKER INTL (EAT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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