Domino's Pizza (DPZ -0.03%) shareholders have had a brutal 2022 so far, with shares down over 25% since early January. The fast-food giant saw impressive growth through earlier phases of the pandemic, but that expansion pace has slowed.
The earnings picture is also being muddled by soaring costs on everything from transportation to labor to ingredients like cheese. And, of course, every major restaurant chain is trying to gain market share in the critical home delivery space.
Those worries will be front-and-center when Domino's announces its latest earnings results in a few days. Let's take a closer look at a few metrics from that April 28 report that might determine whether the stock rebounds from its tough start to 2022.
Domino's doesn't issue short-term sales outlooks, but most investors who follow the stock are expecting to see a modest revenue bump. Sales should inch up by about 5% to $1 billion, according to those projections.
There is a lot of noise in the pizza chain's net sales figure, which will be impacted by currency exchange rate swings and a comparison with some unusually strong growth during earlier phases of the pandemic. For a better reading on demand, watch same-store sales, which were up 1% in the previous quarter in the U.S. and up 2% internationally.
Domino's needs these figures to stay in positive territory to support its ambitions to dramatically expand its global store count over the next several years. Sluggish growth might reflect increasing competition given that nearly every restaurant chain is pouring cash into its home delivery network today.
Prices and costs
Its franchising model protects Domino's from most of the inflation that's impacting the industry today. But franchisees will still be pressured by rising costs of inputs, labor, and transportation.
Look for the chain to pass along almost all of those costs in the form of higher prices or reduced portion sizes in some cases. Ideally, though, delivery and takeout volumes won't be hurt by the shift.
Watch those figures for signs that Domino's is growing sales, but only at the expense of reduced market share. Ideally, the company can manage both higher prices and increasing volumes so that its operating margin continues setting the pace in the industry.
Most investors will be closely following comments by CEO Ritch Allison and his team about the short-term growth outlook. Wall Street pros currently peg sales gains at about 7% in 2022, or roughly the same increase as in the previous full fiscal year.
If management's comments cause that prediction to shift on Thursday, look for the stock price to respond accordingly. Yet investors shouldn't read too much into Domino's 2022 forecast, even if it becomes more downbeat.
The company is still looking at many years of an expanding store base, both in the mature U.S. market and internationally. That progress will be the main factor driving long-term investor returns.