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On Tuesday, Wells Fargo (NYSE:WFC) analyst Zachary Fadem increased the price target on Domino’s Pizza (NASDAQ:DPZ) shares to $465 from $445, while maintaining an Equal Weight rating on the stock. According to InvestingPro data, the stock currently trades at a relatively high P/E ratio of 28x, suggesting premium pricing relative to near-term earnings growth. With a market capitalization of $16.8 billion and an overall Financial Health score of "GOOD," Domino’s maintains a strong market position. Fadem’s assessment followed Domino’s first-quarter performance, which he described as "expectedly soft," noting that earnings per share (EPS) fell short by 27 cents, excluding a 54-cent gain from Domino’s Pizza Dash (DPC Dash). He pointed to the company’s defensive nature, with low tariff exposure, and potential excitement from upcoming catalysts as compares gradually ease, but suggested that international strength was slightly downplayed.
Domino’s Q1 results showed a 0.5% decline in U.S. comparable sales, including a 1.8% increase from pricing, a 2% drop in traffic, and a slightly negative mix. Delivery orders decreased by 1.5%, continuing a trend from the previous quarter, attributed to weakness among low-income consumers. Despite these challenges, the company maintains strong profitability with a gross margin of 28.4% and has demonstrated its commitment to shareholder returns by raising its dividend for 11 consecutive years, as highlighted in InvestingPro’s analysis. Carryout growth also slowed, while international sales improved quarter-over-quarter. Notably, Domino’s gained market share both in the U.S. and internationally.
The company launched a parmesan stuffed crust pizza in March, which, despite high order rates and strong customer satisfaction, did not significantly impact Q1 comparable sales. However, Fadem sees potential for a Q2 catalyst. Domino’s is also set to roll out DPC Dash in May, with expectations of a significant incremental sales lift.
On the operational side, Domino’s reported a decline in cooperative gross margin percentage and an increase in supply chain margin. General and administrative expenses rose year-over-year, including a restructuring charge that impacted EPS. Despite these challenges, the company reiterated its guidance for 2025, including U.S. comparable sales growth and international performance, although geopolitical pressures are expected to lead to a deceleration from Q1 levels.
Fadem adjusted his EPS estimates for 2025 and 2026 slightly, citing the performance of DPC Dash in the second quarter of 2025. The resilience to tariffs and the reiteration of the company’s guidance for the year were factors contributing to the raised price target, now set at approximately 24.5 times the projected 2026 EPS. InvestingPro analysis reveals that 8 analysts have revised their earnings upwards for the upcoming period, with analyst targets ranging from $414 to $555. For deeper insights into Domino’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, which provides detailed analysis of the company’s financial health, market position, and future potential.
In other recent news, Domino’s Pizza reported its Q1 2025 earnings, surpassing earnings per share (EPS) expectations with an actual EPS of $4.33 compared to the forecasted $4.00. However, the company’s revenue fell short of projections, coming in at $1.11 billion against the expected $1.13 billion. Despite the revenue miss, Domino’s demonstrated resilience with global retail sales increasing by 4.7%, excluding foreign currency impacts. U.S. same-store sales saw a decline of 0.5%, while the company anticipates a 3% growth in U.S. same-store sales for 2025. Stifel analysts expressed confidence in Domino’s Pizza by raising the stock price target from $500 to $510, maintaining a Buy rating. They noted the company’s resilience and successful strategies, such as the introduction of the Parmesan Stuffed Crust and value promotions. Analysts at Stifel also highlighted the anticipated partnership with DoorDash (NASDAQ:DASH) as a key initiative to drive future growth. Domino’s Pizza continues to focus on strategic goals and expects to leverage its loyalty program and value offerings to enhance customer acquisition.
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