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Domino’s Pizza Inc (NYSE:DPZ) shares were climbing Tuesday after the company reported better-than-expected first-quarter results.
The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.
Analyst Andrew Strelzik reiterated an Outperform rating while raising the price target from $535 to $575.
Domino’s Pizza reported first-quarter earnings of $3.58 per share, surpassing consensus of $3.41 per share, with the beat being "driven by stronger comps, higher supply chain profits, and a lower tax rate," Strelzik said in a note.
The company "continues to realize meaningful domestic business momentum," with its partnership with Uber Technologies Inc's (NYSE:UBER) Uber Eats and loyalty revamp, "as well as more vocal marketing," he added.
"DPZ’s strategy is driving broad momentum, including among the more challenged low-income consumer cohort, which should extend through the remainder of 2024 and beyond," the analyst further wrote.
Analyst Andrew Charles maintained a Buy rating while lifting the price target from $550 to $580.
Management attributed the strength in the first quarter to "September’s revamped loyalty program," which drove both new and lapsed customers, Charles said. "In particular, mgmt noted the greatest strength amongst lower income consumers, an important dynamic given a challenged lower-income consumer quick service restaurant backdrop," he added.
"Management is shaping up 2024 to continue to beat by guiding to a slightly lower 2Q U.S. comp (despite an easier comparison + ramping Uber contribution) after ending the successful Emergency Pizza promo; and highlighting supply chain investments following 1Q’s margin beat (despite traffic growth & tame cheese prices)," the analyst further stated.
Check out other analyst stock ratings.
Analyst Todd Brooks reaffirmed a Buy rating while raising the price target to $575.
The revamped loyalty program and the launch on Uber Eats "helped generate positive transaction growth in both the delivery and carryout channels for the second quarter in a row," Brooks said. This allowed Domino’s Pizza to record U.S. same-store sales growth of 5.6%, beating the consensus of 4.0%, he added.
"Better profitability for both U.S. company-owned stores (30bps above our estimates) and for the supply chain segment (60bps above) allowed the company to deliver an operating margin of 19.4% vs. consensus of 18.3%," the analyst further wrote.
Analyst Nick Setyan reiterated an Outperform rating while lifting the price target from $520 to $575.
Domino’s Pizza reiterated its 2024 global retail sales and U.S. same-store sales growth guidance, Setyan said. "Q2 SSS growth is expected to be ‘slightly below’ Q1 as the emergency pizza promotion is lapped (partially offset by the continued ramp in Uber sales mix)," he added.
There are several drivers of near- and medium-term transactions that could propel the company's U.S. same store sales growth, the analyst stated.
Analyst Brian Bittner maintained an Outperform rating while raising the price target from $530 to $580.
"Impressive share gains drove a SSS beat (+5.6% vs Street’s +4.2%E) with upside entirely traffic-driven," Bittner wrote in a note. He added that the company could continue to gain market share with the new drivers remaining impactful.
Management's reiteration of "flattish" EBIT margin for 2024 seems "appropriately conservative," the analyst further said.
DPZ Price Action: Shares of Domino’s Pizza are up 0.88% to $531.50 at the time of publication on Tuesday.
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Photo: Courtesy Domino’s
