Should you buy or sell Domino’s Pizza after reporting mixed Q3 results?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 14, 2021
  • Domino’s Pizza shares on Thursday edged higher after announcing its fiscal Q3 results.
  • The company reported its most recent quarterly results before markets opened, beating earnings estimates.
  • However, DPZ revenue for the quarter missed expectations after posting a modest Y/Y growth.

On Thursday, Domino’s Pizza Inc. (NYSE:DPZ) shares edged higher by 1% after announcing its most recent quarterly results. The company reported mixed fiscal Q3 performance, missing analyst expectations on revenue while beating EPS estimates.

Domino’s posted fQ3 non-GAAP earnings per share of $3.24, beating the consensus Street estimate of $3.10, while its GAAP EPS of $3.24, was also ahead of the average analyst estimate of $3.11.

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However, the company’s revenue for the quarter of $998 million missed estimates by $32 million, after posting a modest annual growth of 3.1%.

The DPZ stock is up more than 19% over the last 12 months after bouncing back nearly 27% this year.

Is it time to buy DPZ shares?

From an investment perspective, Domino’s shares trade at a trailing 12-month P/E of 38.77 and a forward P/E of 30.27. Therefore, value investors may opt for alternatives in the market whilst observing performances over the coming quarters.

However, with analysts expecting Domino’s earnings per share to grow by nearly 30% this year and at an average annual rate of about 13% over the next five years, growth investors could find DPZ as an exciting option for their portfolios.

Therefore, although DPZ may not be compelling to short-term investors, it could be a good option for those looking to invest long-term.

Source – TradingView

Can the rebound continue?

Technically, DPZ shares appear to have recently bounced off the trendline support to avoid slipping to oversold conditions. However, with the stock still far from retesting the trendline resistance, the current rebound seems poised to continue.

Therefore, investors could target extended gains at about $488.31, or higher at $502.60. On the other hand, if the stock pulls back before crossing the 100-day moving average, it could find support at $460.25, or lower at $444.90.

Domino’s looks like an exciting buy

In summary, although Domino’s current valuation multiples may scare short-term investors, the stock offers exciting growth prospects, making it attractive for long-term investing. 

Moreover, with shares still far from reaching overbought conditions, the current rebound could continue, pushing the stock price towards the 100-day moving average.

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