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Domino’s stock leaps toward a 2-year high after profit rises above forecasts

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Domino’s Pizza Inc. delivered sharp gains for its shares Monday, after the pizza chain logged a profit beat for its latest quarter, amid strength in both delivery and carryout sales.

The stock
DPZ,
+1.32%

shot up 5.6% in premarket trading, putting it on track to open at the highest price seen during regular-session hours since February 2022.

The company logged fiscal fourth-quarter net income of $157.3 million, or $4.48 a share, compared with net income of $158.3 million, or $4.43 a share, in the year-earlier period. Analysts tracked by FactSet had been modeling $4.38 in earnings per share.

Revenue edged up 0.8% to $1.40 billion, whereas analysts were looking for $1.42 billion.

The company saw 2.8% U.S. same-store-sales growth in the fourth quarter, along with 0.1% same-store-sales growth internationally, when excluding currency impacts. The FactSet consensus was for U.S. same-store sales to rise 2.2%.

Franchised U.S. stores grew sequentially by a net of 92 locations in the fourth quarter, while international store count grew by a net of 302.

“Our positive U.S. transactions and same-store sales growth in both our delivery and carryout channels in the fourth quarter underscore the strength and momentum in our business,” Chief Executive Russell Weiner said in a release.

Domino’s noted that its board of directors on Feb. 21 approved a 25% increase to its quarterly dividend, which was declared to be $1.51 a share. Shareholders of record on March 15 will be paid the new dividend on March 29.

Based on Friday’s stock closing price of $433.65, the new dividend rate implies a dividend yield of 1.39%, which compares with the implied yield for the S&P 500 index
SPX
of 1.41%.

The company also announced a new $1 billion stock repurchase program, to increase the total authorization for repurchases to $1.14 billion. That represents about 7.5% of Domino’s market capitalization as of Friday’s close of $15.13 billion.

Domino’s stock has run up 17.1% over the past three months through Friday, while the S&P 500 has advanced 11.6%.

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