Domino's Pizza stock target raised on strong sales momentum

On Monday, Jefferies updated its outlook for Domino's Pizza (NYSE: ), raising its price target to $512 from the previous price of $480 while maintaining a hold rating on the stock. The adjustment comes after Domino's same-store sales (SSS) grew by a stronger-than-expected 5.6%, beating the consensus estimate of 4.2%.

The company's performance benefited from strong carryout and delivery demand, as well as continued gains from partnerships and customer loyalty rewards programs such as Uber's (NYSE: ).

The analyst noted that while same-store sales are expected to slow slightly in the second quarter as the impact of emergency pizza promotions weakens, mechanisms in place may drive improvements in the second half. Additionally, Domino's reported improved operating margins and a lower tax rate, driving earnings per share (EPS) growth.

Despite these positive results, the full-year margin outlook and long-term guidance remain unchanged. The analyst said that while there may be room for upside in the future, that potential appears to be largely priced into the current share price. As a result, the company reiterated its Hold rating but raised its price target to reflect recent performance and near-term expectations.

Investment Professional Insights

Following Jefferies' recent update on Domino's Pizza, investors may find additional insights from InvestingPro. It is worth noting that the company has been consistent in rewarding shareholders, raising dividends for 10 consecutive years and maintaining dividends for 13 consecutive years.

This consistency is a testament to Domino's financial stability and commitment to returning value to shareholders. Additionally, analysts predict the company will remain profitable this year, driven by strong returns last year and strong results over the past three months, with a total three-month price return of 15.53%.

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The company has a market capitalization of $18.31 billion and a price-to-earnings (P/E) ratio of 35.6, indicating the stock trades at a premium relative to its earnings, according to InvestingPro. Although the company's revenue fell slightly by 1.27% over the past 12 months through the first quarter of 2023, Domino's gross margin was stable at 28.0% and operating margin was 18.3%, reflecting efficient operations and profitability.

For investors looking for a more comprehensive analysis, there are others Investment Professional Tips It's possible to drill down into a company's valuation multiples and liquidity position.Use promo code PRONEWS24, investors can receive an additional 10% discount on annual or two-year Pro and Pro+ subscriptions to gain access to these valuable insights. There are currently 14 additional tips listed in Domino's Pizza's InvestingPro that can help you gain a deeper understanding of the company's financial health and stock performance.

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