Domino’s Pizza, Inc. (DPZ) is scheduled to report their earnings for the first quarter of 2020 before the market opens on Thursday, April 23, 2020. Wall Street expects the world’s largest pizza company to report a consensus profit of $2.32 on sales of $868.96 million. 1
We expect the delivery company to fall short of the street’s view. The I-T earnings per share (EPS) estimate is $2.27 with sales a touch above $868 million. Not living up to analysts’ expectations is to be expected as retail and restaurants were hit hard, real hard, as people were forced to live the lockdown lifestyle thanks to the coronavirus.
According to the US Census Bureau’s ADVANCE MONTHLY SALES FOR RETAIL AND FOOD SERVICES, MARCH 2020, “Advance estimates of U.S. retail and food services sales for March 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $483.1 billion, a decrease of 8.7 percent (±0.4 percent) from the previous month, and 6.2 percent (±0.7 percent) below March 2019.” 2
Food Services and Drinking places saw revenue dip 3.5% for the first three-months of 2020. For March, the numbers are atrocious, sales fell 26.5% compared to February 2020 and 23% lower than a year ago.
Real bold call, right? Earnings and sales are going to be down in the face of the coronacrash. We agree, that takes no guts whatsoever. So, here comes the hot delivery. Dominos Pizza could issue upward guidance for the second quarter of 2020, according to our analysis of Google Trends.
As of now, the consensus EPS estimate for the second quarter is $2.12. That’s down from last year’s $2.19. 1 However, our Google Trends review for the keyword “Domino’s Pizza” shows a 3.5% increase since the middle of March and the start of lockdowns. The numbers are even steeper since April 1st, increasing more than 6% year-over-year (YoY) and rising.
Although Google Trends aren’t a perfect match, our experience and studies show strong correlation between web searches and sales increases/decreases. It makes sense. Most people don’t have Domino’s in their contacts, so they Google, call, and order.
And APPAnnie.com shows the Domino’s APP for iPhones moving from the 210th most popular app in the US on March 16th to the 52nd most popular by March 28th. Since, it’s settled back to the 182nd most popular for the iPhone. iPad popularity increased 200 spots from number 1,359 to 1,159 during the same timeframe.
Based on Google searches and iPhone/iPad app numbers, we can see EPS for the second quarter on 2020 closer to $2.30 per share than the current forecast of $2.12. Of course, management is likely to be cautious in their outlook due to the uncertainty of re-opening the economy. Nonetheless, we wouldn’t be surprised to hear management talk about early quarter success while tempering expectations.
If we are right with our Google Trends and APP analysis for the current quarter, DPZ shares could complete a V pattern and return to the 52-week high of $381.86. 3
Captain Obviously, investing in advance of earnings is risky, especially in a market environment like this. Trading Domino’s Pizza, Inc.’s (DPZ) earnings is strictly speculation and only appropriate for dollars you can afford to lose.