+ 0.70
+ 0.47%

'Generally Positive': The Street Reacts To Domino's Garage Open House

September 9, 2019 3:42 pm
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More
'Generally Positive': The Street Reacts To Domino's Garage Open House

Pizza chain Domino's Pizza, Inc. (NYSE:DPZ) invited multiple Street analysts to its "innovation garage" to showcase its technology and innovation initiatives.

Morgan Stanley: 4 Takeaways

Morgan Stanley analyst John Glass had four takeaways from the event: 

  • Management is sticking with its three-to-five-year comp guidance of 3% to 6%.
  • Near-term initiatives to drive sales include better carryout offers and 20% off orders after 9 p.m.
  • The testing of new features like GPS tracking remains ongoing.
  • Management has no plans to change its "fortressing" strategy.

"Unlike a typical analyst meeting, this event didn't break new news, but what we did hear was generally positive as management outlined some more specific near-term steps to drive domestic sales," the analyst said. 

UBS: Maintaining Competitive Edge

Some investors may have been disappointed with Domino's' event due to the absence of third-quarter commentary or a significant announcement, UBS analyst Dennis Geiger said in a note.

Nevertheless, the presentation reinforced ways the company is using technology and innovation to maintain its competitive advantage, he said. 

For example, voice ordering is offered at 40 stores, and the analyst said it improves labor savings with better up-selling.

Self-driving delivery cars are showing positive results in early testing, Geiger said. 

MKM: What Could Have Been Said

The pizza chain's event was "welcomed" by Street analysts, although management left out commentary on three topics, MKM Partners analyst Brett Levy said in a note.

Domino's showed a confident tone in its outlook, although questions remain regarding whether a more conservative approach to near-term same-store sales is warranted, the analyst said. 

The pizza chain didn't offer any specific details on new menu items, although it did hint at plant-based items, he said.

Domino's could have explained why it isn't at the very least testing third-party delivery options, Levy said. 

"We believe little was offered to change either supportive or negative views. and we continue to expect near-term performances and slowed domestic same-store sales to be prioritized by investors and overshadow the LT strengths." 

Stephens: Reminding The Street

Domino's intended its presentation to serve as a "reminder" to the Street that it remains committed to winning the restaurant space through technology innovation, Stephens analyst Will Slabaugh said in a note.

The company's strategy should result in the trends flattening out at above-peer levels over a two-year period, the analyst said. 

Ratings And Price Targets

Morgan Stanley maintains at Overweight, unchanged $287 price target.

UBS maintains at Neutral, unchanged $285 price target.

MKM Partners maintains at Neutral, unchanged $265 fair value estimate.

Stephens maintains at Overweight, unchanged $300 price target.

Benzinga's Take:

Few argue Domino's is at the forefront of technological innovation. If the pizza chain had given business updates, it could have restored confidence, especially after second-quarter U.S. comps grew just 3% versus expectations of 4.8%.

Do you agree with this take? Email feedback@benzinga.com with your thoughts.

Related Links:

Was Domino's Q2 Fresh Or Stale? Analysts Debate

Morgan Stanley Passes On Chipotle For Domino's

Photo courtesy of Domino's. 

For the latest in financial news, exclusive stories, memes follow Benzinga on Twitter, Facebook & Instagram. For the best interviews, stock market talk & videos, subscribe to Benzinga Podcasts and our YouTube channel.

Related Articles

Why You Should Eat Up Papa John's Stock Over Domino's Pizza

Investors looking for exposure to pizza restaurant stocks should consider picking Papa John's Int'l, Inc. (NASDAQ: PZZA) over Domino's Pizza, Inc. (NYSE: DPZ), read more

Domino's, Papa John's Deliver Disappointing Earnings: Here's What Happened

Pizza chain stocks were trading lower Thursday morning after Domino's Pizza, Inc. (NYSE: DPZ) reported a top-and-bottom line fourth quarter miss, while Papa John's Int'l, Inc. (NASDAQ: PZZA) reported mixed resu read more

Papa John's Vs. Domino's: KeyBanc's Pizza Stock Battle

Investors looking for exposure to one pizza takeout name may want to consider Papa John's Int'l, Inc. (NASDAQ: PZZA) over Domino's Pizza, Inc. (NYSE: DPZ), at least according to KeyBanc. read more

Domino's Pizza Poised To Beat Street Estimates, Cowen Says In Upgrade

The bullish case for Domino's Pizza, Inc. (NYSE: DPZ) is based on expectations for the pizza chain to show strong earnings growth over the coming years — and the near-term Street estimates are too pessimistic, according to Cowen. read more