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Factors Setting the Tone for Domino’s Pizza (DPZ) Q2 Earnings


Domino's Pizza, Inc. DPZ is scheduled to report second-quarter 2018 earnings on Jul 19, 2018, before the market opens. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 13%.

Q2 Expectations

The question lingering in investors’ minds now is whether Domino's will be able to deliver a positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.76, higher than $1.32 reported in the year-ago quarter. Of late, the company’s earnings estimates have witnessed upward revisions. In first-quarter 2018, it witnessed earnings growth of 58.7% on a year-over-year basis.

Meanwhile, analysts polled by Zacks expect revenues of nearly $783.6 million, up 24.7% from the prior-year quarter.

Let’s delve deeper to find out how the company’s top and bottom line will shape up this earnings season.

Factors at Play

Domino's top line in the second-quarter 2018 will continue to be driven by solid brand positioning. Also, the company’s efforts to fortify its presence in the high-growth international markets bode well. Meanwhile, Domino's international growth continues to be strong and diversified across markets, courtesy of exceptional unit level economics. Notably, the first quarter of 2018 marked the 97th consecutive quarter of positive same-store sales in its international business. Additionally, the company’s all four geographic regions reported positive comps, with Americas and Asia-Pacific gaining the most.

Moving ahead, Domino's initiatives on the digital front, increased store counts, focus on re-imaging and other sales-boosting strategies are expected to help sustain the momentum. Furthermore, its digital loyalty program — Piece of the Pie Rewards — continues to contribute significantly toward increase in traffic. The company’s extended ways to order a pizza has kept it in the forefront of digital ordering and customer convenience.

Domino’s also has a wide franchise network, both domestically and internationally. Impressively, by reducing its ownership of restaurants and focusing more on re-franchising, the company minimizes capital requirements and facilitates earnings per share growth and ROE expansion.

Domino's Pizza Inc Price, Consensus and EPS Surprise

What Does the Zacks Model Unveil?

Our proven model does not show that Domino’s is likely to beat earnings estimates in second-quarter 2018. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Domino’s has an Earnings ESP of -0.97%. Although, the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With Favorable Combination

Here are a few other stocks from the Restaurant space that investors may consider as our model shows that they have the right combination of elements to post an earnings beat in the second quarter:

Brinker International, Inc. EAT has an Earnings ESP of +0.78% and a Zacks Rank #2.

The Cheesecake Factory Incorporated CAKE has an Earnings ESP of +0.50% and a Zacks Rank of 3.

Chipotle Mexican Grill, Inc. CMG has an Earnings ESP of +0.85% and a Zacks Rank #3.

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