What Happened:

Shares of fast-food pizza chain Domino’s (NYSE:DPZ) jumped 8.1% in the morning session after the company reported first quarter results that exceeded analysts' revenue expectations. The topline beat was attributed to higher supply chain revenues (driven by higher order volumes, partially offset by mix shift in products sold and a decrease in food basket pricing to stores). The company also observed higher U.S. franchise royalties and fees, and U.S. Company-owned store sales. 

Profitability was also decent as its EPS narrowly outperformed Wall Street's estimates. Looking ahead, The company maintained its long-term guidance. 

Lastly, the Board of Directors declared a quarterly dividend of $1.51/share on its outstanding common stock for shareholders of record as of June 14, 2024, to be paid on June 28, 2024. 

Overall, this was a solid quarter for Domino's. After the initial pop the shares cooled down to $514.32, up 3% from previous close.

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What is the market telling us:

Domino's's shares are not very volatile than the market average and over the last year have had only 4 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 2 months ago, when the company gained 8.6% on the news that the company reported fourth-quarter results that exceeded Wall Street's EPS expectations, though revenue missed. The lower revenue was caused by fewer store openings than expected (394 new stores vs estimates of 433) while the higher profitability was driven by outperformance in its U.S. same-store sales growth, which clocked in at 2.8%, marking an acceleration from its 1.6% growth for all of 2023. 

Furthermore, the company signaled its commitment towards returning value to shareholders as the Board approved a 25% increase in its quarterly dividend to $1.51 per share and granted an additional $1.0 billion for its share repurchase program. Lastly, on December 7, 2023, the company shared its long-term estimates at its Investor Day; management forecasts 7%+ annual retail sales growth, 1,100+ annual net store additions, and 8%+ annual operating income growth for the foreseeable future. 

Overall, this was a mixed quarter for Domino's, but the market is likely happy about the company's accelerating U.S. same-store sales growth.

Domino's is up 24.6% since the beginning of the year. Investors who bought $1,000 worth of Domino's's shares 5 years ago would now be looking at an investment worth $1,915.

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