(MENAFN- Baystreet.ca)
Domino's Pizza, Inc. (NYSE:DPZ) released its quarterly earnings on Thursday which failed to impress investors as the stock was down over 9% in trading.
Let's take a closer look to see what drove the sell-off and whether it could be a good buy on the dip.
Domino's continued to expand its locations with a net 560 stores added during Q4. But it was existing stores that were the problem as same-store sales grew by just 5.6%, compared to 6.9% that analysts were expecting. While sales did continue to grow, the company's sales of $1.08 billion came in just under estimates of $1.1 billion. Per-share earnings of $2.62 also were below forecasts of $2.69.
There was, however, good news for dividend investors as the company announced that it would be hiking its payouts by 18%. But at 65 cents, the quarterly payouts still equate to a dividend yield of only 1%.
Overall, there's not a lot to be excited from these results and while the same-store growth might be better than what you'd expect from a regular retailer, it's still hard to justify paying a premium for the stock. Domino's has been trading at around 30 times earnings, which is a hefty price tag for a company operating in a very saturated and competitive industry.
With growth slowing down, a small dividend and the stock trading at a high multiple, it's hard to see Domino's as a good buy today. And there's not much moat that the company can bank on that would make it a good long-term buy. There are simply better opportunities out there for investors looking for growth or dividends.
MENAFN2202201902120000ID1098156055
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.