Domino’s Pizza Earnings: Fifth Quarter of IMPROVING Margins, Net Income Climbs

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Falling revenue did not prevent Domino’s Pizza Inc. (NYSE:DPZ) from reporting a profit boost in the second quarter. Domino’s Pizza, through its subsidiaries, is engaged in retail sales of food through Domino’s Pizza stores, sales equipment and supplies to Domino’s Pizza stores, and receipt of royalties from domestic and international Domino’s Pizza franchise.

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Domino’s Pizza Inc. Earnings Cheat Sheet

Results: Net income for Domino’s Pizza Inc. rose to $28.1 million (47 cents per share) vs. $25.2 million (40 cents per share) in the same quarter a year earlier. This marks a rise of 11.3% from the year-earlier quarter.

Revenue: Fell 2.3% to $376.1 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Domino’s Pizza Inc. beat the mean analyst estimate of 46 cents per share. It fell short of the average revenue estimate of $387.9 million.

Quoting Management: J. Patrick Doyle, Domino’s President and Chief Executive Officer, said, “We’ve posted another solid quarter, with robust international store growth. First half 2012 domestic store economics improved markedly versus last year, which we think contributed to a decrease in U.S. store closures. With a diversified base of nearly 10,000 locations around the globe, we drove steady demand for our brand and sales for our products worldwide.”

Key Stats:

Last quarter marked the fifth consecutive quarter of increasing gross margins, as the company’s gross margin expanded 1.7 percentage points from the year-earlier quarter to 30.5%. During this time, margins have grown an average of one percentage point per quarter on a year-over-year basis.

The company topped expectations last quarter after falling short of forecasts in the first quarter with net income of 47 cents versus a mean estimate of net income of 49 cents per share.

Net income has increased 12.1% year-over-year on average across the last five quarters. The biggest gain came in the third quarter of the last fiscal year, when income climbed 33.1% from the year-earlier quarter.

Revenue has fallen in the past two quarters. In the first quarter, revenue declined 1.2% to $384.6 million from the year-earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the third quarter has moved down from 42 cents a share to 41 cents over the last ninety days. At $1.93 per share, the average estimate for the fiscal year has fallen from $1.96 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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