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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Domino's Pizza (NYSE: DPZ ) rose by as much as 11% in intraday trading on strong first-quarter results and what could be a short squeeze.
So what: Trading volume was 2.6 times the three-month average, as Capital IQ tracked declining short interest. Why cover now? First-quarter financials came in well above estimates. Revenue rose 2% to $389.2 million, while adjusted profit improved 20% to $0.42 a share. Analysts were expecting $380.6 million and $0.34, respectively, according to Yahoo! Finance data.
Now what: Yet the report also had its flaws. Domestic same-store sales declined by 1.4%, well off last year's 14.3% gain. International comps rose by 8.3%, but Domino's overseas operations still account for less than 12% of sales. So although the shorts are probably right to cover, I'd wait for a lower price or fresh evidence of rising comps before opening a new position in this two-star stock. But that's also the minority opinion around these Foolish parts.
Interested in more info on Domino's Pizza? Add it to your watchlist.
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Report this Comment On May 06, 2011, at 6:31 PM, cantbefoolish wrote:
http://www.fool.com/investing/general/2010/10/14/why-this-is...
"@cantbefoolish,
So no analysis, just hot air? So be it."
@ TMFMileHigh,
How do like that hot air now, jackass?
Report this Comment On May 06, 2011, at 10:00 PM, TMFMileHigh wrote:
@cantbefoolish,
(Grins.) Thank you again for proving my point.
As before, moving on.
Foolish best,
Tim (TMFMileHigh and @milehighfool on Twitter)
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