Why Domino's Stock Rose 11% in October

What happened

Domino's (NYSE: DPZ) shares beat the market last month as the stock gained 11% compared to a 2% increase in the S&P 500 index, according to S&P Global Market Intelligence. The rally wasn't enough to put the pizza delivery chain's returns back above the market, though, as the stock is up less than 10% so far in 2019 compared to a 22% jump in the S&P.

Friends eating pizza.

Image source: Getty Images.

So what

Investors were pleased with Domino's third-quarter earnings report, which, while revealing slowing sales growth, included other good news for the business. The chain notched higher revenue at existing locations both at home and internationally, and it also added over 200 stores to its global base. These wins combined to produce 8% higher sales.

Now what

Executives took the opportunity to announce a new medium-term outlook that reflects tougher market conditions around home delivery. The influx of third-party aggregators and other restaurant chains means that growth will be harder to achieve, and so comps gains should slow over the next few years, management said. Domino's still sees plenty of room to add to its store base both in the U.S. and in key international markets like India and Brazil, meaning investor returns could remain robust.

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Demitrios Kalogeropoulos has no position in any of the 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.

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