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On Tuesday, Goldman Sachs reiterated its Buy rating on Domino’s Pizza (NASDAQ:DPZ) shares with a steady price target of $530. The firm’s analyst, Christine Cho, highlighted the company’s first-quarter performance, which saw a modest increase in stock value compared to the S&P 500. Domino’s Pizza’s shares traded up by 0.6% against the broader market’s 0.1% rise following the release of their quarterly results.
The pizza chain reported earnings per share (EPS) that exceeded Goldman Sachs and Visible Alpha Consensus Data estimates, coming in at $4.33 compared to the predicted $3.98 and $4.12. With a market capitalization of $16.8 billion and trailing twelve-month EPS of $16.83, the company maintains a P/E ratio of 27.95. This beat was partly attributed to a substantial pre-tax unrealized gain from the revaluation of Domino’s investment in DPC Dash. InvestingPro data reveals that eight analysts have recently revised their earnings estimates upward for the upcoming period.
Domino’s U.S. same-store sales saw a slight decline of 0.5%, which was below the expected flat growth. However, the international segment outperformed expectations with a same-store sales growth of 3.7%, surpassing the forecasted 2.0% and 1.9%. Despite this, the quarter closed with eight fewer restaurants overall, factoring in 17 net new domestic locations and a reduction of 25 international outlets.
The company’s supply chain profits were better than anticipated at 11.6%, compared to the Goldman Sachs and Visible Alpha estimates of 11.3% and 11.2% respectively. However, this was balanced by company restaurant profit margins that fell short of expectations at 16.0%, and higher than expected general and administrative expenses, which included $5 million in severance costs due to an organizational realignment conducted during the quarter.
Operating margin and adjusted EBITDA also slightly missed the mark, with actual figures standing at 18.9% for operating margin and $230.5 million for adjusted EBITDA, compared to the predicted 19.4%/19.1% and $235.4 million/$235.5 million, respectively.
Goldman Sachs expressed confidence in Domino’s Pizza’s potential to gain market share within the pizza and broader quick-service restaurant sectors, even amidst challenging economic conditions. The brand’s initiatives, such as the launch of Domino’s Rewards in September 2023 and the ongoing menu innovation, including the introduction of Stuffed Crust Pizza in March, are expected to be key drivers of growth. InvestingPro highlights the company’s strong financial health with an overall score of 2.9 (GOOD), supported by impressive metrics including a 34.2% return on assets and consistent dividend growth, having raised dividends for 11 consecutive years. Subscribers can access 8 additional ProTips and comprehensive valuation metrics in the Pro Research Report.
In other recent news, Domino’s Pizza reported mixed results for its first quarter of 2025. The company exceeded earnings per share (EPS) expectations with an EPS of $4.33, surpassing the forecast of $4.00. However, revenue fell short of projections, coming in at $1.11 billion against the expected $1.13 billion. Analysts from Evercore ISI, Wells Fargo (NYSE:WFC), and Stifel have adjusted their price targets for Domino’s, with Evercore ISI raising it to $520, Wells Fargo to $465, and Stifel to $510. Evercore ISI maintained an Outperform rating, highlighting anticipated growth in same-store sales and strategic initiatives like the partnership with DoorDash (NASDAQ:DASH). Wells Fargo’s analyst noted a "soft" first-quarter performance but pointed to potential catalysts such as the upcoming DPC Dash rollout. Meanwhile, Stifel analysts emphasized the company’s resilience and value promotions, suggesting Domino’s is well-positioned in a competitive market. These developments reflect a strategic focus on innovation and partnerships to drive future growth despite current economic challenges.
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