{"id":39503,"date":"2023-07-23T17:17:10","date_gmt":"2023-07-23T21:17:10","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/dominos-reports-earnings-monday-heres-what-to-expect\/"},"modified":"2023-07-23T17:17:12","modified_gmt":"2023-07-23T21:17:12","slug":"dominos-reports-earnings-monday-heres-what-to-expect","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=39503","title":{"rendered":"Domino’s Reports Earnings Monday. Here’s What to Expect."},"content":{"rendered":"
\n
<\/p>\n
<\/p>\n<\/figure><\/div>\n

Wall Street has been getting much more bullish on
\n Domino\u2019s Pizza
\n lately, just ahead of its Monday morning earnings report. <\/p>\n

For the quarter ended in June, analysts expect the pizza chain\u2019s same-store sales to come in 1% higher than a year ago, and earnings to grow by 8% to $3.06 a share. But fans of the stock are looking far beyond these short-term results.<\/p>\n

\n

Domino\u2019s (ticker: DPZ) announced earlier this month that U.S. customers will be able to place orders through
\n Uber
\n (UBER) Eats and Postmates apps later this year. Since then, at least a dozen analysts have boosted their price targets for the stock.<\/p>\n

Last week,
\n Stifel
\n analyst Chris O\u2019Cull raised his targets for Domino\u2019s shares to $450 from $350. The partnership with Uber Eats could boost sales growth for the next three years, he wrote, noting the company will likely partner with
\n DoorDash
\n (DASH) as well when its exclusive deal with Uber expires in 2024.<\/p>\n

Similar deals in the past suggest that Domino\u2019s could see sales increase in percentage terms by mid-single-digits, according to BTIG analyst Peter Saleh. Papa John\u2019s (PZZA), for example, launched a partnership with DoorDash in 2018. Two years later, third-party platforms accounted for 7% of sales.<\/p>\n

\u201cWe see no reason why Domino\u2019s can\u2019t experience a similar mix with UberEats as the partnership rolls out nationally,\u201d wrote Saleh last Wednesday, lifting his target for the stock to $465 from $400.<\/p>\n

Bank of America analyst Sara Senatore, who also raised her price target for the stock to $465 from $415 last week, estimates that the Uber Eats partnership could boost Domino\u2019s same-store sales by 6% in its first full year.\u00a0<\/p>\n

Domino\u2019s CEO Russell Weiner told The Wall Street Journal earlier this month that the chain and its operators aim to generate $1 billion in new sales by listing menus on Uber\u2019s apps. Stifel\u2019s O\u2019Cull estimates that could equate to $45 million in annual Ebitda, or $1 in earnings per share.<\/p>\n

Profit margins for Uber Eats orders will likely be more attractive, wrote Senatore. Third-party platforms often sell at menu price, while direct orders from Domino\u2019s tend to have a roughly 20% discount. While Domino\u2019s will need to pay Uber for being listed in the app, national brands often pay much lower fees than independent restaurants.<\/p>\n

Domino\u2019s shares have been tumbling since hitting an all-time high in December 2021. Sales have been stagnant as high inflation left consumers with less money to spend at restaurants. Meanwhile, a labor shortage meant there were fewer drivers available to deliver orders for takeout food.<\/p>\n

But the economic environment appears to be turning the corner as commodity prices have started coming down. Historically, every 40-cent change in the price of cheese could move restaurant margins by one percentage point, wrote Saleh. In the second quarter, block cheese prices declined 71 cents on average from the prior year.\u00a0<\/p>\n

Improving profitability, in turn, could help Domino\u2019s compete in the tight labor market to retain and attract more drivers. <\/p>\n

\u201cWe believe an acceleration in sales, coupled with commodity deflation and improved labor availability, should be the catalyst for franchisee profit recovery this year, accelerated domestic development, and ultimately, a much higher share price,\u201d wrote Saleh.<\/p>\n

Although Domino\u2019s shares are now 32% below their record high, the stock is still trading at 30 times earnings\u2014just slightly cheaper than peers like Papa John\u2019s,
\n McDonald
\n \u2018s (MCD), and Yum! Brands (YUM), which owns Pizza Hut. But if the 2023 and 2024 earnings growth comes to fruition, as many analysts have forecast, the stock could have a nice run.\u00a0<\/p>\n

Write to Evie Liu at evie.liu@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Wall Street has been getting much more bullish on Domino\u2019s Pizza lately, just ahead of its Monday morning earnings report. For the quarter ended in June, analysts expect the pizza chain\u2019s same-store sales to come in 1% higher than a year ago, and earnings to grow by 8% to $3.06 a share. But fans of […]<\/p>\n","protected":false},"author":1,"featured_media":39504,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-39503","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nDomino's Reports Earnings Monday. Here's What to Expect. | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Wall Street has been getting much more bullish on Domino\u2019s Pizza lately, just ahead of its Monday morning earnings report. 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