Shares of Domino's Pizza Inc. DPZ were up over 2% in yesterday’s trading session after the company posted robust fourth-quarter 2016 results, with both earnings and revenues beating the Zacks Consensus Estimate.
Performance in Detail
Adjusted earnings of $1.48 per share beat the Zacks Consensus Estimate of $1.43 by 3.5%. Earnings climbed 28.7% year over year on strong sales.
Quarterly revenues increased 10.6% year over year to $819.4 million and surpassed the Zacks Consensus Estimate of $773 million by 6%. The improvement was backed by higher supply chain revenues, increased domestic franchise and company-owned stores revenues as well as higher franchise international revenues.
Comps
Global retail sales (including total sales of franchise and company-owned units) were up 7% year over year. The increase was primarily due to strong comps from domestic stores. Excluding foreign currency impact, global retail sales gained 9.7%.
During the quarter, the company’s domestic stores (including company-owned and franchise stores) comps increased 12.2% compared with 10.7% growth in the year-ago quarter. However, domestic stores comps grew 13% in the previous quarter.
The company experienced year-over-year comps growth of 13.7% at company-owned stores higher than 10% comps growth in the year-ago quarter, but lower than the 13.8% growth in the last quarter. Domestic franchise stores comps grew 12.1%, better than comps growth of 10.7% a year ago, but weaker than 12.9% growth in the preceding quarter.
Comps at international stores, excluding foreign currency translation, grew 4.3%. This was lower than the prior quarter and year-ago quarter improvement of 6.6% and 8.6%, respectively.
Margins
The company’s operating margin contracted 10 basis points to 31.1%, in the quarter. The slightly lower consolidated operating margin was driven primarily by higher food cost, escalating transaction-related expenses and increased depreciation expense from the company’s Pizza Theater reimaging program. Nevertheless, lower insurance expenses benefited the operating margin and partially offset these declines.
2016 Results
Domino's Pizza’s full-year adjusted earnings of $4.30 came above the Zacks Consensus Estimate of $4.25 by 1.2%. Furthermore, it increased 24.6% from the year-ago quarter figure of $3.45 on the back of higher revenues.
Full-year revenues of $2.47 billion topped the Zacks Consensus Estimate of nearly $2.43 billion by nearly 2% and increased 11.6% year over year.
Domino's Pizza Inc Price, Consensus and EPS Surprise