Domino’s In Base Ahead Of Earnings; These Big Chains Set Up Too

Domino’s Pizza (DPZ) reports third-quarter earnings on Thursday, as the pizza-delivery giant and other restaurants navigate the economy’ reopening and struggles to find available workers. Domino’s stock slipped on Wednesday, but was in a base.

The company reports as it tries to retain gains it made at the height of the coronavirus pandemic, helped by online ordering and a rebound in the takeout side of its business.

Domino’s Earnings

Estimates: Wall Street expects Domino’s earnings to increase 25% to $3.11, according to FactSet. Revenue was seen rising 7% to $1.035 billion. Consensus Metrix forecast a 1.6% increase in domestic system-wide same-store sales.

Results: Due before the open.

Domino’s Stock

Shares fell 0.8% to 476.28 in the stock market today. Domino’s stock was in a flat base with a 548.82 buy point, but well below the 50-day line.

The stock has a 67 Composite Rating. Its EPS Rating is 74. The stock’s relative strength line has faded since July.

That month, Domino’s stock leapt higher after the company reported second-quarter earnings that topped forecasts. Those results, analysts said, eased investors’ concerns about how the economy’s reopening might affect the chain after last year’s food-delivery boom under lockdown.

Areas with fewer Covid-related restrictions had higher sales, the company said in July. Less-affluent areas had stronger same-store sales growth than in wealthier ones. Same-store sales growth in rural areas outperformed those in urban areas. The company is investing in its car-side delivery service.

However, Domino’s stock has trended lower ever since the earnings spike on July 22.

“Last quarter DPZ got a lot of credit for . . . showing that reopening was actually a positive for their business,” Stephens analyst James Rutherford said in a research note last week. “This quarter sentiment seems to have a turned a bit more negative heading into the print, and the bar for the U.S. comp is trending lower.”

Domino’s Stock And Labor Costs

Domino’s, as with other restaurants, has faced hiring difficulties, particularly those related to delivery drivers. Those challenges have pushed labor costs higher.

Rutherford noted that Domino’s has bumped delivery prices higher. But he said he expected the company to stick with the prices popular $5.99 and $7.99 delivery and carryout deals.

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