Domino’s (DPZ) is set to report its fourth-quarter results on Monday, and investors are hungry for more than just pizza.
After a year of mixed performance, Wall Street is looking for signs that the company can continue to deliver growth, particularly in the face of challenges in its international operations.
Beyond the numbers: what Wall Street expects
Analysts expect Domino’s to report revenue of $1.48 billion for the quarter, with same-store sales up 1.72% year-over-year.
Adjusted earnings are projected to reach $4.93 per share, an increase from $4.48 in the prior year.
Despite expectations of a potentially “soft” fourth quarter due to adverse weather conditions, Citi analyst Jon Tower noted in a client note that the market seems to have already factored in any potential shortfalls.
Domino’s shares are up more than 12% year-to-date, outpacing the S&P 500’s 5% gain, although its one-year gain of 13% lags behind the S&P’s 23% jump.
In its third-quarter results, Domino’s projected annual global retail sales growth of approximately 6% for 2024.
International challenges
A major area of concern for long-term investors is the performance of Domino’s international unit.
Tower highlighted this as a “key focus,” with many analysts closely watching Domino’s Pizza Enterprises (DPE), its largest franchisee, which is planning to close 205 unprofitable locations, primarily in Japan.
Stifel analyst Chris O’Cull anticipates that these closures will create a roughly 100 basis-point headwind to global net unit growth in 2025, presenting a hurdle for the company to overcome.
The DoorDash opportunity
Domino’s is also gearing up to capitalize on opportunities beyond its existing partnership with Uber.
CEO Russell Weiner told investors on a recent earnings call that third-party order aggregators are boosting results because their users are high-income customers.
With its exclusivity agreement with Uber ending at the end of the first quarter, Domino’s is poised to list on other apps, potentially unlocking significant revenue.
Tower noted that investors are particularly focused on the potential expansion of third-party delivery services to DoorDash (DASH).
“DoorDash is bigger than Uber, so that would certainly be … a more significant impact on our business than Uber,” Weiner said, estimating that being on all the order aggregators represents a $1 billion opportunity.
Menu innovation: a potential game-changer?
Menu innovation, particularly the potential reintroduction of a stuffed crust pizza, could provide a significant boost to same-store sales growth in the US.
Deutsche Bank research analyst Lauren Silberman suggested that this could arrive in the second half of 2025.
Loyalty, value, and Berkshire’s vote of confidence
In addition to delivery expansion and menu innovation, Domino’s is focusing on its loyalty program, app and website upgrades, and value platforms to drive same-store sales in the US.
TD Cowen analyst Andrew Charles told Yahoo Finance ahead of the Super Bowl that the brand is leading its industry in terms of value perception.
Adding to the positive sentiment surrounding Domino’s, a recent SEC filing revealed that Warren Buffett’s Berkshire Hathaway (BRK-B) holds 2.38 million shares in the company as of the end of 2024, making it the fourth-largest shareholder.
CFRA analyst Garrett Nelson called this a “big vote of confidence,” further bolstering investor confidence in Domino’s long-term potential.
As Domino’s prepares to report its fourth-quarter results, investors will be closely watching for signs that the company can navigate its international challenges, capitalize on new delivery opportunities, and continue to innovate its menu and customer experience.
The combination of these factors will ultimately determine whether Domino’s can satisfy Wall Street’s hunger for growth.
Earnings overview:
Here’s what Wall Street expects:
- Adjusted earnings per share: $4.93 (vs. $4.48 year prior)
- Revenue: $1.48 billion (vs. $1.40 billion year prior)
- US same-store sales growth: 1.72% (vs. 2.80% year prior)
- Company-owned: 1.79% (vs. 5.90% year prior)
- Franchise: 1.74% (vs. 2.60% year prior)
- International same-store sales growth: 1.63% (vs. 0.10% year prior)
Fiscal 2024 expectations:
- Adjusted earnings per share: $16.70 (vs. $14.66 year prior)
- Revenue: $4.74 billion (vs. $4.48 billion year prior)
- US same-store sales growth: 3.63% (vs. 1.60% year prior)
- Company-owned: 4.30% (vs. 5.40% year prior)
- Franchise: 3.63% (vs. 1.40% year prior)
- International same-store sales growth: 1.37% (vs. 1.70% year prior)
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