During the recent earnings conference call, Patrick Doyle, CEO of Domino's Pizza (NYSE:DPZ), stated, "It was just another boring great quarter here at Domino's." He was referring to the company's "consistent strong results" seemingly every quarter which can look somewhat boring if you are looking for unpredictable volatility. Instead, Domino's Pizza continues to steadily build a solid business.
The mouth-watering results
Domino's Pizza reported fiscal second quarter results on July 22. Total revenue leaped 8.9% to $451 million. System-wide same-store domestic sales jumped 5.4% on top of the 6.7% it did in the year-ago quarter. International did even better with 7.7% growth on top of 5.8% last year.
If you do the math, that's a two-year growth rate of same-store sales of 12.5% domestically and 13.9% internationally. Meanwhile, earnings per share tacked on 17.5% to $0.67 per diluted share.
It was the 82nd quarter in a row, or more than two decades, of positive same-store sales internationally. In the earnings press release, Doyle stated,
"The first half of 2014 has proven to be yet another positive story for our global brand and hardworking franchisees. We are performing well in the U.S. and international markets by driving sales and building stores around the world. We also opened our 11,000th store this quarter, an important milestone for a growing brand."
Domino's is growing "weather" or not you like it
During the Q&A of the conference call, an analyst pointed out there was no weather benefit in the second quarter yet the growth percentage was even stronger than during the first quarter. While many restaurant chains suffered during the calendar first quarter due to the terrible winter storms, Domino's Pizza actually saw a benefit from increased delivery orders.
For the first quarter, the company then estimated same-store sales domestically grew between 1% and 1.5% as many snowed-in customers who couldn't make it to restaurants turned to delivery instead. The first quarter saw total domestic same-store sales rise 4.9% and international rise 7.4%, both figures behind the growth rate of this more recent second quarter.
Doyle calmly explained, "We've got the brand right, the food right, the digital side of this right and that's really the momentum growth." He made it clear that it wasn't any particular new menu item that drove it such as the new specialty chicken launch. It is just old-fashioned great execution.
"But honestly, I think it is really about the continued momentum we've got in the brand giving customers an experience that's relevant to them today and that's really been the continuation of the strength that you saw both domestically and internationally."
Branding the brand even stronger
Despite the robust results, Domino's Pizza isn't done working on its brand. The company is undergoing a reimage campaign that includes remodeling the stores. Obviously this doesn't have much of a direct impact on delivery, but branding is all about a lasting impression. As an example, a new customer in for carryout who leaves with positive feeling may be more likely to then order delivery in the future.
According to the conference call, Domino's Pizza notices a modest increase in same-store sales after the remodel that gets more pronounced over time as delivery customers do a once-in-a-while carryout and take notice. Currently 10% of U.S. stores and 20% of international have completed their remodels. It is expected to be "substantially all of them" by the end of 2017.
When boring means predictable, sustainable, and yet growing by a good clip, boring is this Fool's friend. Domino's Pizza trades at a P/E of 26 based on the current share price and analyst estimates for fiscal year 2014 of $2.87 per share. This estimate represents 17% growth over last year and 16% growth for next year based on the estimate of $3.34 per share. With the P/E less than double the growth rate, assuming the growth rate boringly continues for the long term, Domino's Pizza deserves a closer look.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.