Personal Finance

Why Domino's Pizza Inc. Stock Slipped 12% Last Month

Pizza being cut up with a pizza cutter

What happened

Domino's Pizza Inc. (NYSE: DPZ) has been one of the best-performing stocks of recent years, but that doesn't mean every month is a winner. Last month, the pizza-delivery chain got tripped up after turning a mixed earnings report. The stock ended July down 12%, according to data from S&P Global Market Intelligence .

Pizza being cut up with a pizza cutter

Image source: Getty Images.

Most of the stock's losses came on July 25, after Domino's reported earnings:

DPZ data by YCharts

So what

Domino's shares fell 10% after the earnings report came out, even though the company reported strong numbers. The chain said revenue was up 14.8% to $628.6 million, which beat estimates at $613.4 million, riding a 9.5% increase in domestic comparable sales and a 2.6% uptick in international comps.

On the bottom line, earnings per share increased from $0.98 to $1.32, topping expectations at $1.22.

However, investors had a number of concerns, including slowing international growth, narrowing operating margin, and an earnings-per-share result that would have missed estimates had it not been for a lower tax rate.

CEO Patrick Doyle acknowledged that international same-store sales were "slightly under our expectations," but he added, "We remain very confident in our continued ability to generate best-in-class growth, and are encouraged by the strong store growth we are seeing from our international franchisees."

Now what

Domino's shares have bounced back from the depths of the sell-off, gaining 7% since then.

The company didn't issue guidance in the report, but its domestic same-store-sales growth near double digits and a streak of 94 quarters of international same-store-sales growth should offer some reassurance for investors. Store growth remains strong, as the company has opened more than 1,000 locations abroad in the past year.

With strong comparable-sales growth and delivery gaining in popularity, this stock should continue to outperform.

10 stocks we like better than Domino's Pizza

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Domino's Pizza wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 1, 2017

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

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.

In This Story


Other Topics


Latest Personal Finance Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More