Domino’s Pizza (NYSE: $DPZ) is an American multinational pizza chain founded in Michigan in 1960 with approximately 20,600 stores across more than 90 countries.
On Monday, April 29, 2024, the pizza chain reported its first quarter 2024 financial results that surpassed analyst expectations.
First Quarter Earnings Highlights
For the first quarter of 2024, Domino’s reported strong financial results that showcased its operational efficiency and strategic initiatives. The company’s revenue increased by 5.9% year-over-year to $1.14 billion, exceeding analyst expectations of $1.08 billion, primarily driven by higher supply chain revenues and U.S. franchise royalties and fees.
Net income rose by a great reading of 20.1% to $141.14 million, surpassing analysts’ estimated net income of $120.04 million. The diluted EPS stood at $3.58, outperforming the estimated EPS of $3.39, representing a 22.2% YoY increase.
Operational Excellence
Domino’s Q1 2024 performance was underpinned by its commitment to operational excellence and strategic initiatives. The company reported a strong 18.6% increase in income from operations and 19.4% on an adjusted basis, driven by higher U.S. franchise royalties and fees and improvements in supply chain gross margins.
Same-Store Sales Growth
A key indicator of Domino’s success is its same-store sales growth, which reflects the year-on-year change in sales for its restaurants that have been open for at least a year. In the first quarter of 2024, the company’s U.S. same-store sales grew by 5.6%, with company-owned U.S. stores seeing an even higher increase of 8.5%.
This strong performance was fueled by several strategic initiatives, including the enhanced Domino’s Rewards loyalty program and positive order growth across all income cohorts in the U.S. Also, the company initiated marketing efforts on the Uber Eats platform, projecting sales from this channel to reach 3% by the end of the year.
International Performance
While the international markets faced geopolitical challenges, including the exclusion of the Russian market from future store count and sales projections, Domino’s managed to maintain a steady performance. The company reported a 0.9% increase in international same-store sales, reflecting its commitment to expanding its global footprint and increasing franchisee profitability.
Domino’s continued its aggressive expansion strategy, adding 164 net new stores globally during the first quarter of 2024. This growth was fueled by a significant contribution from international markets, further solidifying the company’s position as a global leader in the pizza industry.
Future Outlook and Shareholder Returns
Domino’s reaffirmed its long-term guidance, expecting over 7% annual global retail sales growth and significant store expansion. The company’s management remains confident in its ability to capitalize on new opportunities and adapt to evolving market conditions.
Domino’s commitment to returning value to its shareholders was evident in its decision to declare a quarterly dividend of $1.51 per share. Additionally, the company repurchased $25 million worth of shares in the first quarter, with $1.12 billion remaining under its current repurchase authorization.
CEO Russell Weiner expressed optimism about the company’s ‘Hungry for MORE’ strategy, which focuses on expanding sales, store count, and profitability. He stated, “Our first quarter results demonstrated that our Hungry for MORE strategy is off to a strong start: delivering MORE sales, MORE stores, and MORE profits.”
Domino’s Stock Performance
Domino’s Pizza (NYSE: $DPZ) is currently trading at $522.75 as of writing, up 4.74% from the previous close of $499.07. The stock opened on Monday at $530.30.surging impulsively to hit a new 53-week high of $539.97. The strong start reflects investor enthusiasm following the company’s better-than-expected Q1 2024 earnings report. With strong growth across key metrics and an upbeat outlook, traders are bidding up shares of the pizza delivery leader.
Should You Consider Buying Domino’s Pizza Stock in 2024?
Domino’s Pizza’s strong Q124 results and upbeat forward guidance make a convincing case for investors to consider taking a position in the stock. The company is firing on all cylinders, with impressive same-store sales growth in the U.S., successful loyalty program initiatives, and an aggressive global expansion strategy.
Domino’s track record of operational excellence and commitment to dividend payouts and share buybacks further strengthens its attractiveness. However, potential barriers such as inflationary pressures and intensifying competition in the food delivery space must be considered before making an investment decision.
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