Domino's Pizza (DPZ, Financial) is the second-largest pizza chain in the United States and the largest worldwide, with more than 10,000 corporate and franchised stores in 70 countries. The company’s growth over the last few months has been terrific and consequently, the stock is up over 16% YTD. Nearly all of the company’s initiatives have paid off, and this fact was evident by the company’s recent quarterly report.
For Q1FY15, Domino’s reported an increase of 19.1% in the adjusted earnings per share as compared to previous year. Global retail sales grew 16.4% excluding impact of foreign currency and domestic same store sales grew by 14.5%. G&A grew by $9.9 million in the first quarter 2015 versus the prior year. The company expected its G&A in the range of $270 million to $275 million for its 53-week year.
Growth plans
The consistent growth in revenue was primarily the result of three factors:
- Higher supply chain center volumes and increased sales of equipment.
- Higher domestic same-store sales and store count growth.
- Higher international monarchs from same store sales and store count growth, partially offset by the negative impact of forex.
Domino's has engrossed most of its vitality on international expansion, as their international segmentation also raised by 93 stores –Â 140 store openings and 47 closures. Over the previous four quarters, their international segmentation has grown by 658 stores. As a fact, international markets have robust comparable growth. Presently, the company is operating in 70 countries with around 6,200 international stores. The company only has 151 stores in major countries which hold over 25% of the world’s population including China, Russia, Indonesia and Germany. In 15 most well-known international markets, the company has a chance to open about 4,040 supplementary stores. Due to the company’s expansion rage, many remarkable results came up.
Online initiatives
Domino's Pizza accounted around 40% of digital global sales in international markets for the first quarter. In 2014, the company stated $4 billion in global digital sales, approximately half of the company’s order. Online ordering facility is one of the major reasons for the company’s future earnings growth as online orders have greater margins due to less overhead charges. This facility leads Domino’s over smaller pizza companies, as small firms can’t afford online ordering environment with applications.
Conclusion
Despite recording significant growth, Domino’s Pizza is undertaking new initiatives and still has room to run higher. The company has executed its plans perfectly in the past and is highly likely to repeat that in the future. The company is increasing outlets and is also growing its online presence. All these factors act as a big tailwind for the company. Hence, I think Domino’s Pizza is still a great buy.
