Domino’s Stock (NYSE:DPZ)
Domino’s stock soared on Thursday after the company reported encouraging financial results for the third quarter of 2022. The market was down sharply on the latest inflation numbers. But Domino’s Pizza (NYSE:DPZ) third-quarter report was good enough for the stock to buck the trend. The stock was up 9.5% as of 10:38 a.m. ET today.
What’s the Reason?
In the third quarter, Domino’s Pizza (NYSE:DPZ) generated over $1 billion in revenue, up more than $70 million from the same quarter last year and about what Wall Street expected.
But a large part of Domino’s Pizza (NYSE:DPZ) revenue comes from franchisees. Therefore, revenue isn’t the same as pizza sales. Global retail sales were down 1.6% year over year, which doesn’t look good. But the strength of the U.S. dollar is distorting international sales.
Adjusting foreign currency exchange is much more encouraging for Domino’s Pizza (NYSE:DPZ). Same-store sales (comps) in international markets were up 5.2%. And in the U.S., comps were up 4.1%. These strong numbers are a big reason the Domino stock was up today.
What’s Next?
Another reason the Domino stock is up related to its guidance. Currency exchange is affecting profitability more than anticipated, and management is responding by cutting expenses. Its full-year outlook reduced capital expenditures by $20 million. And $5 million to $8 million more is being cut from general and administrative costs.
Management thinks Domino stock is cheap, considering it spent $196 million repurchasing shares in the third quarter. This is a sharp uptick from the $50 million it spent on buybacks last quarter. With over $400 million of authorization left and Domino’s stock still hovering near 52-week lows, management could still aggressively repurchase shares in the fourth quarter, which will keep boosting earnings per share.
Featured Image- Megapixl @ Jetcityimage
Author Shariq Khan 
