Domino’s Pizza Inc. witnessed a remarkable uptick in its stock value on Monday, buoyed by a quarterly profit that outstripped expectations, fueled by robust performance in both delivery and carryout sales. The reward program of the company played a pivotal role in these favorable outcomes, with a surge of 3 million active members, representing a 10% growth, bringing the total to 33 million active members by the close of 2023.
CEO Russell Weiner attributed this expansion to the success of their inventive marketing campaign, the “emergency pizza” promotion. This tactic not only bolstered active membership but also contributed to the early success of the Domino’s Rewards program. Weiner conveyed these insights during the post-earnings call with analysts, underscoring the efficacy of their customer acquisition endeavors.
During early trading, Domino’s stock (DPZ) soared by 5.9%, hinting at its potential highest close since January 19, 2022. The company disclosed fiscal fourth-quarter net income of $157.3 million, or $4.48 per share, compared to the prior-year period’s net income of $158.3 million, or $4.43 per share. Despite a marginal dip in net income, the earnings per share (EPS) rose owing to a decrease in the number of shares utilized for calculation, stemming from the company’s $269 million share repurchases in 2023.
While analysts monitored by FactSet had predicted an EPS of $4.38, Domino’s exceeded expectations with $4.48. However, the revenue for the quarter saw only a slight uptick of 0.8%, reaching $1.40 billion, slightly below the analysts’ consensus of $1.42 billion.
Domino’s exhibited robust performance in the U.S. market, with a 2.8% increase in same-store sales in the fourth quarter. Furthermore, international same-store sales growth, excluding currency impacts, saw a marginal rise of 0.1%. The FactSet consensus for U.S. same-store sales had anticipated a growth of 2.2%.
Throughout the fourth quarter, the company witnessed a sequential net growth of 92 franchised U.S. stores, while the international store count expanded by a net of 302.
CEO Weiner underscored the positive growth in U.S. transactions and same-store sales, highlighting the resilience and momentum of their business. The promotion of their “homemade pan pizza” offering, featured on air for the first time since 2014, contributed to heightened awareness. Weiner emphasized the necessity to alter the perception of their Pan Pizza as their “best-kept secret.”
On February 21, Domino’s board of directors highlighted a 25% upsurge in its quarterly dividend, now set at $1.51 per share. Shareholders of record on March 15 will receive the updated dividend on March 29. At current prices, the revised dividend rate yields 1.32%, slightly lower than the S&P 500 index’s implied yield of 1.41%.
In addition to the dividend hike, Domino’s unveiled a new $1 billion stock repurchase program, elevating the total authorization for repurchases to $1.14 billion. This constitutes roughly 7.1% of Domino’s market capitalization, estimated at around $16.02 billion.
Over the past three months, Domino’s stock has surged by 24.0%, surpassing the S&P 500’s 11.6% gain. The company’s proactive measures, including dividend increments and stock repurchases, evince confidence in its financial standing and strategic trajectory.
