Domino’s Earnings Beat Overshadowed by Sluggish Growth and Stock Dive

Domino’s Pizza Inc. (NYSE: DPZ) reported mixed second-quarter results on Thursday. The company beat earnings expectations but fell short on same-store sales growth. The world’s largest pizza chain also announced a significant reduction in its international store expansion plans, citing challenges in key markets. The company’s stock price took a hit in premarket trading after the results, dropping over 14%.

Domino’s Beats EPS and Revenue Expectations, Falls Short on Sales Growth

Domino’s reported earnings per share of $4.03, surpassing analysts’ estimates of $3.68. The company’s total revenue for the quarter came in at $1.10 billion, largely in line with expectations. U.S. same-store sales increased by 4.8%, slightly below the anticipated 4.9%, while international same-store sales grew by 2.1%, missing the projected 2.5%.

Despite the earnings beat, Domino’s revealed plans to scale back its international expansion. The company reduced its target for new international outlets by approximately 275 stores from its original goal of opening more than 925 locations.

Additionally, Domino’s suspended its long-term target of 1,100 global net stores, signaling a more cautious approach to growth.

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Domino’s Stock Drops in Premarket After Q2 Results

The market reacted negatively to Domino’s announcement, with shares plummeting in premarket trading. As of 9:25 AM EDT, DPZ stock was trading at $405.01, down $68.26 or 14.42% from the previous day’s close of $473.27.

This sharp decline erased a significant portion of the stock’s year-to-date gains, which stood at 15.52% before the earnings release.

Domino’s current market capitalization stands at $16.508 billion, with a trailing P/E ratio of 30.91 and a forward P/E of 29.67. Despite the recent setback, analyst sentiment remains cautiously optimistic, with price targets ranging from $470.00 to $626.00 and a consensus recommendation leaning towards “Buy.”

Disclaimer: The author does not hold or have a position in any securities discussed in the article.