If there’s any fast-food company synonymous with the word “delivery,” it’s Domino’s Pizza (NYSE:DPZ). You might know this company for its famous “delivery in 30 minutes or less” promise. But will DPZ stock holders get a fast and fresh capital delivery when the Domino’s earnings report is released on October 8?
That’s the million-dollar question, and of course nobody can guarantee an earning beat. And there’s a lot on the line, as a poor result could derail the upward trajectory of DPZ stock.
On the other hand, prospective shareholders should know that Domino’s has an impressive track record when it comes to earnings announcements.
Besides, Domino’s is no ordinary restaurant and these aren’t ordinary times we’re living in. All in all, you might find that DPZ stock, pre-earnings or not, is the ultimate manifestation of the stay-at-home trade.
DPZ Stock at a Glance
To be perfectly honest, DPZ stock is a mouth-watering asset for momentum-oriented traders.
The stock’s 52-week range is $227.50 to $435.14, and the share price closed at nearly $434 on October 2. So clearly, the bulls are in control here.
Granted, the onset of the novel coronavirus put some price pressure on DPZ stock. However, that condition was temporary and the bulls commandeered the price action in short order.
With all of that in mind, you might think that DPZ stock would have an outrageously high valuation. Yet the stock’s trailing 12-month price-to-earnings ratio is 38.68. That’s higher than some stocks in the consumer staples category, but it’s not outlandish.
Finally, we should address the forward annual dividend yield, which is 0.73%. Undoubtedly, you won’t get rich overnight with that yield. Still, with such robust share-price appreciation, profiting from DPZ stock doesn’t necessarily require large dividend distributions.
Some Nice Surprises
If you’re going to buy a stock immediately prior to an earnings event, it’s a good idea to check the track record of the company. Does it typically beat analysts’ estimates?
If not, then it’s sometimes best just to avoid the stock and wait until the earnings event has come and gone. Thankfully, this avoidance strategy probably won’t be necessary with DPZ stock.
The fact is that Domino’s has a pretty good streak going when it comes to beating Wall Street’s estimates. In fact, during two previous quarters, the average actual-versus-expected earnings surprise ratio was 33.48%.
For the first quarter of this year, analysts projected that Domino’s would report earnings of $2.25 per share. Yet, the company reported $2.99 per share, signifying a positive surprise of 32.89%.
Ready for the Pandemic
Moreover, in the fourth quarter of 2019, the analysts were preparing for earnings of $2.29 per share. However, the actual result was $3.07 per share, yielding an earnings surprise of 34.06%.
Thus, even before the onset of the coronavirus pandemic, Domino’s proved itself time and again as a profitable restaurant chain. And why shouldn’t it? We’re talking about the largest pizza company in the world in terms of sales.
With more than 17,100 stores located in over 90 markets, Domino’s was already the go-to source for hungry pizza lovers. Then came the pandemic, but that only strengthened Domino’s as a restaurant with a wide economic moat.
That’s because this restaurant already had a reputation as a fast deliverer of cheap food. “30 minutes or less,” remember? Domino’s pounded that message into customers’ head for years. And in the wake of widespread stay-at-home orders, this reputation for speedy and reliable delivery is really starting to pay off.
Will you grab a few slices of DPZ stock before earnings, or after? Hesitating might not be the best strategy as Domino’s remains the world’s foremost pizza chain with a well-timed fast-delivery business model.
And with a track record of positive earnings surprises, don’t be surprised if Domino’s delivers yet another street beat.
On the date of publication, Louis Navellier had a long position in DPZ. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.