Slice of the Pie: Could Domino's Pizza Continue Its Run in 2016?
Management guidance for 2016
After two years of double-digit growth in same-store sales, Domino’s Pizza’s (DPZ) management has set the 2016 same-store sales growth guidance at 2% to 5% for domestic restaurants.
Revision in same-store sales growth
By focusing on improving the customer experience and providing a welcoming atmosphere through its re-imaging program, DPZ has delivered more than what analysts were estimating for same-store sales growth in 4Q15. This appears to have increased confidence in DPZ for analysts, who raised their same-store sales growth estimates for fiscal 2016 to 4.6% from the earlier estimate of 4.4%.
Revision in earnings per share estimates
With the same-store sales growth revised upwards, it’s expected that revenue and EPS (earnings per share) will also be revised upwards. Following the release of Domino’s 4Q15 results, analysts have revised their revenue estimates for fiscal 2016 from $2.3 billion to $2.4 billion, an increase of 2.3%. The increase in revenue has raised the EPS from $4 to $4.20, an increase of 4.7%.
You could gain exposure to DPZ by investing in the PowerShares FTSE RAFI US 1500 Small-Mid Portfolio ETF (PRFZ), which has invested 0.24% of its portfolio in DPZ. Also, PRFZ has invested 0.19% in Dunkin’ Brands (DNKN), 0.16% in The Cheesecake Factory (CAKE), and 0.13% in Texas Roadhouse (TXRH).
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