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It’s been a challenging year to be an investor. A hawkish Fed, geopolitical issues, and lingering COVID-19 uncertainties have been a thorn in the side of stocks all year long.

Needless to say, there have been few places to hide out.

Domino’s Pizza DPZ shares have been no exception to the market’s woes, down more than 40% and widely underperforming the general market.

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Domino’s Pizza is a top player in the Quick-Service Restaurant or QSR Pizza category. Through its subsidiaries, the company operates as a pizza delivery company in the United States and internationally.

Analysts have pulled back their earnings estimates across the board over the last several months, pushing the stock into a Zacks Rank #5 (Strong Sell).

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Image Source: Zacks Investment Research

Quarterly Performance

Domino’s Pizza has struggled to exceed quarterly estimates, falling short of earnings and revenue expectations in four consecutive quarters.

In its latest print, the company fell short of earnings expectations by roughly 5.4% and revenue forecasts by a marginal 0.02%. Below is a chart illustrating the company’s revenue on a quarterly basis.

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Image Source: Zacks Investment Research

For the company’s upcoming quarterly print, the Zacks Consensus EPS Estimate of $3.99 suggests a Y/Y earnings decline of 6%.

Growth Estimates

DPZ’s earnings are forecasted to take a hit in its current fiscal year (FY22), with the Zacks Consensus EPS Estimate of $12.15 indicating a Y/Y earnings decline of more than 10%.

Still, things kick back into the green in FY23, with estimates calling for 18% Y/Y earnings growth.

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Image Source: Zacks Investment Research

Bottom Line

Disheartening quarterly results and negative earnings estimate revisions have landed DPZ shares in a challenging spot for the short term.

Domino’s Pizza DPZ is a Zacks Rank #5 (Strong Sell), telling us it has a weak near-term earnings outlook.

Investors should pivot to stocks that either carry a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) – these stocks have a much stronger earnings outlook and potential to deliver explosive gains in the short term.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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