Domino's Pizza Group plc (LON:DOM) Just Reported Annual Earnings: Have Analysts Changed Their Mind On The Stock?

Last week, you might have seen that Domino's Pizza Group plc (LON:DOM) released its yearly result to the market. The early response was not positive, with shares down 9.5% to UK£2.62 in the past week. Results overall were respectable, with statutory earnings of UK£0.19 per share roughly in line with what the analysts had forecast. Revenues of UK£600m came in 4.9% ahead of analyst predictions. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Domino's Pizza Group

Taking into account the latest results, the most recent consensus for Domino's Pizza Group from seven analysts is for revenues of UK£613.1m in 2023 which, if met, would be a reasonable 2.1% increase on its sales over the past 12 months. Per-share earnings are expected to leap 57% to UK£0.31. Before this earnings report, the analysts had been forecasting revenues of UK£603.7m and earnings per share (EPS) of UK£0.24 in 2023. Although the revenue estimates have not really changed, we can see there's been a very substantial lift in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

There's been no major changes to the consensus price target of UK£3.22, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Domino's Pizza Group analyst has a price target of UK£3.75 per share, while the most pessimistic values it at UK£2.30. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Domino's Pizza Group's revenue growth is expected to slow, with the forecast 2.1% annualised growth rate until the end of 2023 being well below the historical 2.9% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.2% per year. Factoring in the forecast slowdown in growth, it seems obvious that Domino's Pizza Group is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Domino's Pizza Group's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Domino's Pizza Group's revenues are expected to perform worse than the wider industry. The consensus price target held steady at UK£3.22, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Domino's Pizza Group analysts - going out to 2025, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for Domino's Pizza Group (of which 1 is a bit concerning!) you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.