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Domino’s tech- assisted growth drives shares up most since 2016

Tech investments helped Domino’s keep an edge against rivals.

Domino’s Pizza climbed the most in more than three years after posting profit and revenue that topped analysts’ estimates in the first quarter, as tech investments help it keep an edge against rivals.

Profit of $2.20 a share topped projections of $2.09 in the period that ended March 24. Revenue also exceeded estimates.

Key insights

Pizza makers aren’t the exclusive providers of quick dinners anymore as Chipotle, Taco Bell and McDonald’s race to expand the service in the US and abroad. But Domino’s has been investing in technology to make sure it stays ahead of the competition. 

Cowen analyst Andrew Charles called the results “an encouraging start to 2019,” and said they came despite “heightened promotional efforts from third-party delivery.” Same-store sales, a key performance metric for restaurants, rose 3.9% in the US. Investors didn’t seem to mind that the result fell short of the 4.2% gain seen by analysts, according to Consensus Metrix.
The company has also been aggressively opening new stores in the US, with a net 27 restaurants launching in the period. It now has more than 5 900 in the US and has been pushing growth abroad as well, launching a net 173 new locations in the quarter.
Still, international same-store sales growth fell short of estimates, and Chief Executive Officer Ritch Allison said executives “remain focused on improving” that metric.

Market reaction

The shares surged as much as 12% to $302.05 Wednesday in New York, the biggest intraday advance since February 2016. They had climbed about 9 percent this year through Tuesday’s close.

 
© 2019 Bloomberg L.P
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