Earnings preview: Domino's Pizza eyes growth in a shifting market

Domino's Pizza, Inc. (DPZ), a titan in the global pizza domain, has evolved significantly from its humble beginnings in 1960 in Ypsilanti, Michigan, to a global presence with nearly 20,000 outlets across over 90 countries. As the preeminent name in the worldwide pizza sector, DPZ's journey of adaptation and innovation amidst fierce competition is noteworthy. With the pandemic's shadow receding, the brand is at a critical juncture, facing both hurdles and prospects.

This earnings preview delves into DPZ's recent performances, anticipates its forthcoming earnings disclosure, and outlines pivotal elements influencing its growth trajectory.

DPZ's Recent Earnings Performance

In its previous Q3 earnings, DPZ marked its most substantial EPS surpass in five years, coupled with optimistic insights on comparable trends. Nevertheless, sales slightly fell short of expectations, and U.S. comparable sales experienced a dip. The U.S. carryout segment showed resilience with a +1.9% comp, contrasting with a -2.3% in U.S. delivery comps, indicating ongoing challenges in the delivery domain.

Q4 Projections and Essential Observations

For Q4, DPZ is optimistic about U.S. comparable sales rebounding, fueled by delivery comps' revival through strategic loyalty program enhancements and promotional initiatives. 2024 holds promise for DPZ, expecting transaction growth spurred by its collaboration with Uber Eats and additional ventures.

A focal point in the upcoming earnings is the fresh Uber Eats alliance, poised for a complete U.S. rollout by year-end. This collaboration is anticipated to bolster delivery volumes, inviting new clientele and amplifying DPZ's slice of the pizza delivery market. The tangible benefits of this partnership are expected to surface in Q1 2024, heralding a phase of enhanced company economics.

Stock Assessment and Valuation

With a market capitalization of $14.93B and an enterprise value of $20.06B, DPZ's forward P/E ratio stands at 27.17, slightly above the S&P 500's average of 18.7. Positioned within the Consumer Cyclical sector, which currently holds a 28.3 price-to-earnings ratio on a trailing twelve-month basis, DPZ's TTM P/E of 29.3 presents it as pricier than sector counterparts.

Conclusion

As DPZ steers through the evolving post-pandemic environment, its strategic maneuvers, notably the Uber Eats partnership, are critical to watch. Although DPZ's valuation edges higher than its sector peers, its history of innovation and adaptability underscores its potential for sustained shareholder value. The imminent earnings report is key to unveiling DPZ's forward momentum and the primary drivers expected to shape its market stance in the upcoming periods.

$DPZ(DPZ)