“Dominos Q3 Earnings Forecast: Evercore ISI Reduces Price, Shares Fall 3%”
Source: Davit Kirakosyan
Domino’s Pizza shares take a hit
Shares of Domino’s Pizza (NYSE:DPZ), a leading player in the global pizza delivery industry, slipped more than 3% intra-day today. The drop in stock prices came after Evercore ISI analysts cut their price target for the pizza giant from $500 to $480. Despite the reduction, the analysts have maintained an Outperform rating on the stock, suggesting that it will likely outperform the market.
Revised US Same-Store Sales Estimates
The revision in the price target comes ahead of Domino’s third-quarter earnings announcement slated for Thursday. The analysts have justified their new stance by referring to findings from proprietary consumer panel data. According to this data, there appears to be a need to lower US same-store sales (SSS) estimates, a key metric that measures sales growth in stores open for at least a year.
As a result, Evercore ISI analysts adjusted their Q3 US SSS estimate from an increase of 4% to an increase of 2%. This is a significant reduction, especially when compared to the Street estimate of a 3.8% increase.
Fourth Quarter Projections
Looking ahead to the fourth quarter, the analysts project a modest 2% SSS growth in the US. They anticipate that this will be largely supported by promotional activities undertaken by the company. However, the consensus forecast projects a slightly more optimistic figure of 3.5%.
The revised price target of $480 reflects a valuation of 24 times the estimated earnings per share (EPS) for 2026. This brings Domino’s valuation closer to its 10-year average and positions it slightly above industry peers like Yum! Brands and McDonald’s, reflecting Domino’s competitive position.
Growth Catalysts on the Horizon
Despite the lowered price target and reduced SSS estimates, Evercore ISI analysts highlighted several upcoming growth catalysts for Domino’s. Among these is the planned integration with DoorDash in 2025. This strategic partnership is expected to boost Domino’s delivery capabilities and potentially increase its market share.
In addition to the DoorDash integration, Domino’s is also working on revamping its digital app. The new app is expected to enhance the customer experience and drive higher online orders, a critical success factor in the highly competitive food delivery market.
Confidence in the Long-Term Potential
The analysts expressed confidence in Domino’s long-term growth potential, despite the near-term challenges. They believe the company can achieve 8% operating income growth and double-digit EPS gains. These projections underline the company’s strong operational efficiency and robust financial health.
In conclusion, while short-term hurdles are expected to impact Domino’s performance, the pizza giant’s strong fundamentals, strategic partnerships, and digital initiatives position it well for long-term growth. Investors and stakeholders will be closely watching the upcoming earnings announcement on Thursday for further insights into the company’s performance and future growth strategies.