Domino's Pizza (DPZ, Financial) posted striking results for the third quarter. It witnessed vigorous growth in its comps, primarily driven by both strong traffic and ticket growth across its stores worldwide. Moreover, its continued pain to roll over new products such as new specialty chicken drove additional traffic for the company during the quarter. Also, its franchise worldwide successfully executed its Pizza Theater store re-image program across the world that partially contributed to its performance for the quarter.
Impressive results and outlook
Domino’s Pizza for the third-quarter posted revenue of $446.7 million, an increase of 10.5% as compared to $404.05 million in the third-quarter last year. This also surpassed the consensus estimates of $434.1 million in revenue for the quarter. Also, its net income for the quarter rose 16.3% to $35.6 million or earnings of $0.63 per share as against the net income of $30.6 million or earnings of $0.53 per share in the corresponding period last year. Its earnings topped the average analysts’ forecasts of $0.61 per share for the quarter.
Looking ahead, the company is confident to close the year on a high note. Domino’s Pizza expects the momentum to carry on to the fourth quarter and into 2015. It has opened approximately 77 stores in the trailing twelve months. The company during the third quarter opened its first store in Norway and is expected to inaugurate additional two to three store in the region in the current quarter. Domino's continues to see strong growth in its same store sales. Its same store sales grew 7.7% in the home market and 7.1% in the international market respectively. The company has around 5016 outlets in the home market and 6,265 outlets in the international market.
Seeing good growth
It is seeing strong store sales in regions such as India, Turkey, Japan and the U.K. Domino's is effectively executing its mixed strategies for both the developed and emerging markets that are driving its sales coupled with effective promotional efforts by its franchises worldwide. Also, its significant efforts to ramp up its store re-image continue to yield positive results for the company and driving traffic and raising tickets across its stores globally. Besides, its efforts to expand its menu options are driving incremental sales growth for the company globally.
Its new products such as oven-backed sandwich offerings and new specialty chicken are gaining traction in the market. It witnessed enhanced traffic in both its digital and traditional orderings. Domino's anticipates its aggressive promotions, new products and strong digital orderings to boost its sales in the current quarter as well. Moreover, the company continues to benefit from the double digit growth in its systemwide sales. It has also increased the prices for its menu and experienced moderation for its concerns over commodity prices particularly cheese that will possibly help the company put up a better show in the fourth quarter.
Domino's is additionally observing continuous increase of orders in the digital mode. People are these days ordering from their smartphones, tablets and computers that are driving its sales. It is also aggressively promotion its voice platform on iPhone and android apps that should drive its growth in the coming years. Its voice order embraced 200,000 marks since the introduction. Also, its digital ordering for the first time has raised higher ticket in comparison to the traditional phone orderings.
Furthermore, its digital offerings predominantly drove its international sales. In fact in some of the regions such as the U.K. Ireland and Switzerland the digital ordering rose approximately 70% during the reported third-quarter. Domino's continues to witness strong ticket raised by its digital orderings by its franchises in results in Australia, New Zealand, Europe and Japan that will drive its growth in the long-run.
Conclusion
Domino’s Pizza is one stock that is performing quite well and yielding positive results for the shareholders. Its topline has picked up the pace this fiscal year and is expected to grow at a healthy rate in the future. The analysts expect the company to grow at a compounding annual growth rate of 15.98% higher than the average industry CAGR of 14.63% for the next five years that indicate remarkable growth prospects for the company in the long-run.
