Yahoo Finance Why Domino's (DPZ) Stock Is Falling Today
What Happened:
Shares of fast-food pizza chain Domino’s (NYSE:DPZ) fell 14.2% in the pre-market session after the company reported second-quarter results with revenue and gross margin missing analysts' expectations. The company suspended its long-term guidance of 1,100 annual net store openings, which is a bad sign. It could mean that the market is more saturated than previously thought. It could also mean that the product is no longer resonating with customers, especially in areas previously thought to be good new markets for the company. Either way, lower store openings will certainly mean lower revenue growth over time. Overall, this quarter could have been better.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Domino's? Access our full analysis report here, it's free.
What is the market telling us:
Domino's's shares are not very volatile than the market average and over the last year have had only 3 moves greater than 5%.
The biggest move we wrote about over the last year was 5 months ago, when the stock gained 8.6% on the news that the company reported fourth-quarter results that exceeded Wall Street's EPS expectations, though revenue missed. The lower revenue was caused by fewer store openings than expected (394 new stores vs estimates of 433) while the higher profitability was driven by outperformance in its U.S. same-store sales growth, which clocked in at 2.8%, marking an acceleration from its 1.6% growth for all of 2023.
Furthermore, the company signaled its commitment towards returning value to shareholders as the Board approved a 25% increase in its quarterly dividend to $1.51 per share and granted an additional $1.0 billion for its share repurchase program.
Lastly, on December 7, 2023, the company shared its long-term estimates at its Investor Day; management forecasts 7%+ annual retail sales growth, 1,100+ annual net store additions, and 8%+ annual operating income growth for the foreseeable future. Overall, this was a mixed quarter for Domino's, but the market was likely happy about the company's accelerating U.S. same-store sales growth.
Domino's is up 0.5% since the beginning of the year, but at $415.20 per share it is still trading 22.2% below its 52-week high of $533.64 from June 2024. Investors who bought $1,000 worth of Domino's's shares 5 years ago would now be looking at an investment worth $1,644.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefitting from the rise of AI, available to you FREE via this link.
