TD Cowen analyst Andrew Charles reiterated a Buy rating on the shares of Domino’s Pizza Inc (NYSE:DPZ) with a price target of $550.

The company reported first-quarter FY24 sales growth of 6% year-on-year to $1.085 billion, beating the analyst consensus estimate of $1.079 billion. EPS of $3.58 beat the consensus estimate of $3.42.

The analyst attributes the EPS beat primarily to 110 basis points of better supply chain margin vs the Cowen model ($0.20), lower interest expense ($0.05), and lower income tax ($0.16).

DPC Dash (Domino’s China) investment losses from fair value adjustments weighed on the first-quarter EPS by $0.53 relative to the analyst’s $0.50 estimate.

U.S. same store sales of 5.6% exceeded the analyst’s expectations, aided by positive order counts for both delivery & carry-out orders, said the analyst.

Order count growth was observed across all income cohorts in a challenged restaurant spending atmosphere for lower income consumers.

DPZ ended first-quarter with 20,755 global locations (6,874 domestic, 13,881 international), a 3.7% increase that virtually aligned with the analyst’s 20,752 estimate.

According to the analyst, positive U.S. order counts for both the delivery & carry-out businesses along with 1.9% commodity deflation drove upside in supply chain margins.

Price Action: DPZ shares are trading higher by 4.39% at $521.00 on the last check Monday.

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