Fourth-quarter earnings at Domino's increased 27% to $0.38 per diluted share, or $27 million. Sales increased 11% to $478.5 million, with domestic same-store sales decreasing 0.2%. An extra week in the quarter boosted earnings by $0.04. Going forward, the company stuck by its previous expectation that net income will increase by 11% to 13% in 2005.
On a brighter note, though, Domino's increased its annual dividend by 54%, touting its $87.7 million in free cash flow and its ability to return cash to shareholders. Regardless, it's hard to ignore the daunting $755.4 million in long-term debt that's evident in its balance sheet.
Given a lackluster expectation for the rest of the year, investors bidding Domino's shares up by more than 3% in recent trading seems a bit much. Although the dividend definitely sweetens the deal, its sluggish same-store sales figure may make some wonder whether pizza rivals such as Papa John's
Given such concerns, maybe investors should wait for Domino's to deliver some better numbers before grabbing a slice of this pie.
For more pizza-related news, take a look at the following Foolish content:
- Which pizza maker is piling it high?
- What are Papa's plans for Nigel?
- How about some pie in the sky?
Mathew Emmert seeks out great opportunities in dividend-paying stocks in Motley Fool Income Investor . Try it for free.
Alyce Lomax does not own shares of any of the companies mentioned.