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

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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 results.

Domino's Earnings Recap: Domino's said it earned $3.46 per share in the fourth quarter on revenue of $1.36 billion versus expectations of $3.89 per share and revenue of $1.39 billion. U.S. same-store sales were up 11.2% in the quarter and were higher by 11.5% for the full year.

International same-store sales growth was 7.3% in the quarter and was higher by 4.4% for the full year.

Net income rose from $129.3 million a year ago to $151.9 million and improved from $400.7 million in 2019 to $491.3 million in 2020.

Management guided for global retail sales growth (excluding fx) to be 6% to 10% over the next two to three years. The company also expects global net unit growth of 6% to 8% over the same time period.

Shares of Domino's were trading lower by more than 7% Thursday morning at $337.36.

Cowen On Domino's: Domino's U.S. comps were short of expectations of 14% and this contributed to the EPS miss, Cowen analyst Andrew Charles said in a note. The math behind U.S. comps implies 560 basis points of deceleration on a two-year basis.

Management's pre-COVID pandemic guidance called for global net unit growth of 6% to 8% and global retail sales of 7% to 10%. As such, the revised outlook and the 1% lowering of the low-end of the retail sales growth imply U.S. comps of 1% to 5% and flat international comps at 4%.

Cowen maintains an Outperform rating on Domino's stock with an unchanged $450 price target.

Papa John's Quarter Recap: Papa John's said it earned 40 cents per share in the fourth quarter on revenue of $469.8 million versus expectations of 46 cents per share and revenue of $465.72 million. Comparable sales were up 13.5% in North America and up 21.4% internationally.

Net income improved from a loss of $2.142 million a year ago to positive $13.167 million. Net income expanded from $4.866 million for the full year 2019 to $57.932 million in 2020.

Management cited the "on-going uncertainty" amid the COVID-19 pandemic in its decision not to provide a 2021 outlook at this time.

Shares of Papa John's were trading lower by more than 9% Thursday morning at $93.39.

Related Link: Domino's CEO On Pizza Chain's Steady Demand Tailwind

Stephens On Papa John's: Papa John's North American comp growth of 13.5% implies a deceleration from 18% in the prior quarter, but still beat the Street's estimate of 13.4%, Stephens analyst James Rutherford wrote in a note. The research firm was expecting comps to accelerate to 19.1% after checks in the South showed stores were "running nicely higher than mid-teens."

"Despite the NA comp coming in-line with Street and below our number for the quarter, we still expect Epic Stuffed Crust has driven a YTD acceleration, and we hope to get color on this during the call," the analyst wrote.

Stephens maintains an Overweight rating on Papa John's stock with an unchanged $110 price target.

(Photo: Domino's Pizza)

Latest Ratings for DPZ

DateFirmActionFromTo
Apr 2021Morgan StanleyMaintainsOverweight
Apr 2021JP MorganMaintainsOverweight
Mar 2021CitigroupInitiates Coverage OnBuy

View More Analyst Ratings for DPZ
View the Latest Analyst Ratings

 

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Posted-In: Analyst Color Earnings News Price Target Reiteration Restaurants Analyst Ratings General Best of Benzinga

Latest Ratings

StockFirmActionPT
GIKColliers SecuritiesInitiates Coverage On14.0
SANWLake StreetInitiates Coverage On6.0
LILAMorgan StanleyDowngrades15.0
BEJP MorganUpgrades36.0
NEXACredit SuisseUpgrades11.0
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