Domino’s Domination Continues Unscathed

It’s a challenge to find a weak spot of the world leader in pizza delivery.

May 30, 2014 at 9:35AM

Source:  Domino's Pizza

What a pleasure it is to pop open the earnings release from Domino's Pizza (NYSE:DPZ) among a sea of gloom-and-doom reports from many food and beverage companies. It helps that folks who are stuck in the house because of the snow tend to order pizza more often, as Papa John's (NASDAQ:PZZA) can also attest, but the ongoing stampede of Domino's Pizza has been going on for some time.

The extra-large results
Domino's Pizza reported fiscal first-quarter earnings on May 1, five days ahead of the report from Papa John's. Domestic same-store sales popped 4.9%. International same-store sales leaped 7.4%. It was the 81st quarter in a row, or over two decades, of uninterrupted quarterly international same-store sales growth for Domino's. Adjusted diluted earnings per share jumped 15.3% to $0.68.

President and CEO J. Patrick Doyle credited "innovations in both technology and food." During the conference call, Doyle noted that Domino's new handmade pizza helped play a positive role. Domino's also increased its store count by an additional 102 restaurants during the quarter and just recently crossed the 11,000-restaurant milestone.

Then there were the winter storms. While many restaurants complained about the weather, it was actually a boon for Domino's Pizza and Papa John's. Domino's Pizza estimated that the weather actually increased its sales between 1% and 1.5% for the quarter.

Source:  Papa John's

Papa knows best
Lance Tucker, CFO of Papa John's, only touched on this subject briefly during the Q&A session of Papa John's conference call. He stated, "We typically don't attribute much by way of our comps, good or bad, to weather. What I think we can say is we may have gotten a little bit of benefit, but in light of a 9.6% domestic comp, certainly it wasn't the lion's share of what happened."

For Papa John's, domestic same-store sales soared 9.6% as Tucker stated. International same-store sales flew 6.4%. Earnings per diluted share ticked up 7% to $0.45. The company blamed its somewhat-lackluster EPS rise on "commodity headwinds." Papa John's is likely experiencing the same ingredient pressure that is affecting Domino's Pizza; cheese prices rose from $1.67 per pound to $2.16 per pound over the period.

Neither company is blinking
In the big picture, although cheese prices and the like might hit the media as some terrible event that will bring the pizza joints to their knees, neither Domino's Pizza nor Papa John's seem worried.

John Schnatter, founder and CEO of Papa Johns, stated:

I'm extremely confident that we will continue to drive the business forward globally by building on the quality advantages we have established over the past 30 years. We will also continue to capitalize on digital expertise, with our industry-leading digital sales mix approaching 50% of total sales and almost 60% of all delivery sales.

Domino's Pizza's Doyle stated:

We're off to a great start to the year. Our international division, once again, posted stellar results – reinforcing what a growth engine they are for us. We're thriving in the U.S., too, with sales and store growth, and innovations in both technology and food. Franchisees have reported strong profits. Our shareholders benefited from both dividends and share repurchases. We're driving results.

Foolish final thoughts
It's probably hard for both Domino's Pizza and Papa John's not to be confident. The two of them have both been so successful with growth every quarter that it's almost routine and boring. Boring can be good and very profitable to your portfolio as it implies sustainability and consistency.

Pizza isn't the only huge opportunity coming to your living room
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 


Nickey Friedman has no position in any stocks mentioned. The Motley Fool owns shares of Papa John's International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information