Domino’s Pizza Inc (NYSE: DPZ) recently reported its fourth-quarter earnings, surpassing expectations and impressing investors. The pizza chain reported earnings per share of $4.48, beating the consensus estimate of $4.38. Although sales were slightly below expectations at $1.40 billion compared to the consensus of $1.42 billion, the company’s performance was still strong.
One of the key factors impacting Domino’s performance in the fourth quarter was a decrease in the U.S. company-owned store gross margin by 1.6 percentage points compared to the previous year. This decrease was primarily attributed to higher labor costs, insurance costs, and an increase in the loyalty liability resulting from the relaunch of the Domino’s Rewards program.
Despite these challenges, Domino’s showed strong global net store growth of 394 for the fourth quarter and 711 for fiscal 2023. Excluding the closure of the Russian market, global net stores grew by 870 for the fiscal year.
In response to its positive performance, Domino’s announced a 25% increase in its quarterly dividend to $1.51 and authorized an additional stock buyback of up to $1 billion. This move was well-received by investors, with Domino’s shares gaining 5.9% to close at $459.00 on Monday.
Following the earnings report, several analysts made changes to their price targets on Domino’s. JP Morgan raised the price target from $420 to $430, although analyst John Ivankoe downgraded the stock from Overweight to Neutral. Oppenheimer boosted the price target from $470 to $530 and reiterated an Outperform rating. Argus Research analyst John Staszak upgraded Domino’s Pizza from Hold to Buy and maintained a price target of $530.
Overall, Domino’s strong quarterly performance and strategic moves to reward shareholders have positioned the company well for future growth. Investors and analysts alike are optimistic about the company’s prospects, making Domino’s Pizza a stock to watch in the coming months.
