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Here's Why Domino's Pizza Shares Jumped Higher on Wednesday

By Lou Whiteman – Apr 24, 2019 at 5:05AM

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The company's momentum continued into the first quarter.

What happened

Shares of Domino's Pizza (DPZ 0.62%) climbed more than 10% on Wednesday morning after the pizza chain delivered first-quarter earnings that came in ahead of expectations and pushed back at some of the concerns that the company's momentum was slowing after a strong period of outperforming.

So what

Domino's reported a somewhat mixed quarter relative to expectations, with earnings of $2.20 per share beating the $2.09-per-share consensus estimate but revenue, at $835.96 million, falling about $14 million shy of expectations. The company said same-store sales in the U.S. grew by 3.9% and grew 1.8% internationally, falling short of expectations for 4.2% growth in the U.S. and 2.4% overseas.

Hands grabbing for a large pizza pie.

Image source: Getty Images.

Global retail sales increased by 4.6% in the first quarter, or 8.5% without the negative impact of foreign currency exchange rates. The company reported first-quarter global net growth of 200 stores, including 27 in the U.S. and 173 internationally, giving it more than 16,000 locations worldwide.

Domino's CEO Ritch Allison said in a statement, "I am very pleased with our balanced retail sales growth, driven by a healthy combination of solid same-store sales and unit growth." Allen said the company is focused on improving international comps, "but I am encouraged by the strong unit growth in the first quarter, and remain confident in the fundamentals related to market share, retail sales growth and unit economics within this terrific segment of our business."

Now what

International is vital to Domino's long-term growth outlook, with execs confident they can easily add another 5,000 stores in key markets over time. Allen has his work cut out for him to make that segment a top performer.

But overall the market simply wanted Domino's to provide evidence that after more than seven years of improving U.S. comps, the business has not yet peaked. Judging by the stock's performance on Wednesday morning, Domino's was able to deliver.

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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