Bull of the Day: Domino's Pizza (DPZ)
Founded in 1960, Domino’s Pizza (DPZ) has become one of the biggest quick-service restaurant brands here in the U.S. and abroad; it currently has more than 15,900 locations in 85 markets.
Q2 Earnings Impress Wall Street
Back in July, Domino’s reported second-quarter results that blew past analyst expectations; both earnings of $2.99 a share and total revenue of $920 million easily beat the Zacks Consensus Estimate.
Comparable store sales in the core U.S. market shot up 16% compared to only 2% growth in the first quarter.
Unlike many other restaurants, Domino’s has been able to stay open throughout the Covid-19 pandemic, helping spur growth to new levels.
The company also benefitted from the fact that many of its rivals either closed down or had to scale back their operations as people were forced to stay home.
But because of its well-known (and fast) delivery model, Domino’s has been able to keep customers happy and satisfied. It recently added a contactless car-side delivery model to its carryout locations and even continues to add to its store footprint here in the U.S.
DPZ is Rallying
Year-to-date, shares of Domino’s have gained a respectable 33% compared to the S&P 500’s 2.12% return. Earnings estimates have been rising too, and DPZ is a Zacks Rank #1 (Strong Buy) right now.
For the current fiscal year, 11 analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up well over one dollar to $12.54 per share. Earnings are expected to jump over 30% compared to the prior year period. 2021 looks strong too, with earnings expected to maintain positive year-over-year growth.
Domino’s is also a dividend stock. Shares currently yield 0.8% annually, and the company most recently raised its cash payout by 20%.
Its cash trends are strong enough to keep its dividend stable, too. Last year, Domino’s generated $411 million in free cash flow, up 50% from 2018, and for the first half of 2020, operating cash flow hit $212 million.
If you’re an investor searching for a restaurant stock to add to your portfolio, make sure to keep DPZ on your shortlist.
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