Yahoo Finance Domino's Pizza, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
Domino's Pizza, Inc. (NYSE:DPZ) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues were US$873m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$3.07, an impressive 30% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Domino's Pizza after the latest results.
View our latest analysis for Domino's Pizza
Taking into account the latest results, the consensus forecast from Domino's Pizza's 26 analysts is for revenues of US$3.88b in 2020, which would reflect a satisfactory 6.0% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 3.0% to US$11.01. Before this earnings report, the analysts had been forecasting revenues of US$3.84b and earnings per share (EPS) of US$10.45 in 2020. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 6.8% to US$380. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Domino's Pizza, with the most bullish analyst valuing it at US$425 and the most bearish at US$308 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Domino's Pizza's revenue growth is expected to slow, with forecast 6.0% increase next year well below the historical 13%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 9.9% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Domino's Pizza.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Domino's Pizza following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Domino's Pizza. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Domino's Pizza going out to 2024, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 2 warning signs for Domino's Pizza (1 can't be ignored!) that you need to be mindful of.
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