Event: The pizza delivery company reports earnings results for the quarter ending Sept. 30 on Tuesday before the market opens. Wall Street expects Domino’s (DPZ) to report a profit of 41 cents per share. That estimate has held steady over the last 90 days. The company has exceeded expectations in three of the last four quarters. Shares of Domino’s have gained 35% in the last year of trading. Analysts expect Domino’s to grow profits by 15% from the current year to the next. At current prices, Domino’s trades for 19 times current year estimated earnings.
Analysis: Domino’s is priced for perfection. The company is growing nicely and subsequently rewarded with a premium valuation. There is no indication that Domino’s will stumble any time soon. The only chink in the armor is a 2-cents-per-share earnings miss in the quarter ending in March. The company is in the sweet spot of the economy. A value menu that serves a budgetary conscious consumer should continue to do well in this environment. Unless we fall off the fiscal cliff, all systems are go for Domino’s. I expect the company to beat earnings when it reports results on Tuesday.
Action: Find out if Jamie is trading Domino’s this week by signing up for his free sneak preview: 10 Surprise Blowout 3rd Quarter Earnings Trades.