The pizza giant has been displaying promising signs of profit growth, maintaining a strong track record. Over the past two quarters, it pleasantly surprised the market by surpassing profit estimates with an average of 11.58%.
An overwhelming 98.4% of the company’s shareholders are institutional investors, reflecting their confidence in the brand. Among 20 analysts covering the stock, the consensus is an average “Buy” recommendation, with 11 analysts suggesting “Buy” and 9 suggesting “Hold.” The highest target price given by an analyst stands at $465.
Recently, Domino’s experienced a surge in its stock price, attributed to its partnerships with Uber Eats for pizza deliveries.
Analysts predict that for the quarter ending in June, the pizza chain’s same-store sales will rise by 1% compared to the previous year, and earnings will grow by 8% to $3.06 per share. However, investors and analysts are looking beyond these short-term results.
Earlier this month, Domino’s announced plans to allow U.S. customers to place orders through Uber Eats and Postmates apps later in the year. In response, many analysts have raised their price targets for the stock.
The collaboration with Uber Eats has the potential to drive sales growth over the next three years, and it is anticipated that Domino’s might also partner with DoorDash once its exclusive deal with Uber expires in 2024.
Past similar deals suggest that Domino’s could experience mid-single-digit percentage growth in sales, as observed by BTIG analyst Peter Saleh.
Domino’s CEO, Russell Weiner, stated that the company and its operators are targeting $1 billion in new sales by listing menus on Uber’s apps. Stifel’s O’Cull estimates this could translate to $45 million in annual EBITDA or $1 in earnings per share.
Additionally, the profit margins for Uber Eats orders are expected to be more appealing compared to direct orders from Domino’s, as third-party platforms often sell at menu price, while Domino’s offers roughly a 20% discount on direct orders. Despite the listing fees to Uber, national brands like Domino’s typically benefit from lower fees than independent restaurants.
Domino’s Pizza Long (Buy)
Enter At: 390.87
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