Domino's Pizza, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

It's been a good week for Domino's Pizza, Inc. (NYSE:DPZ) shareholders, because the company has just released its latest first-quarter results, and the shares gained 5.9% to US$516. Domino's Pizza reported US$1.1b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$3.58 beat expectations, being 5.4% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Domino's Pizza

Taking into account the latest results, the consensus forecast from Domino's Pizza's 29 analysts is for revenues of US$4.82b in 2024. This reflects a reasonable 6.2% improvement in revenue compared to the last 12 months. Per-share earnings are expected to rise 2.4% to US$15.89. Before this earnings report, the analysts had been forecasting revenues of US$4.81b and earnings per share (EPS) of US$15.76 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The consensus price target rose 8.0% to US$536despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Domino's Pizza's earnings by assigning a price premium. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Domino's Pizza at US$626 per share, while the most bearish prices it at US$425. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Domino's Pizza's past performance and to peers in the same industry. It's clear from the latest estimates that Domino's Pizza's rate of growth is expected to accelerate meaningfully, with the forecast 8.4% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 5.7% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 9.8% per year. Domino's Pizza is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Domino's Pizza going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for Domino's Pizza you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.