Analyst Note
| Sean Dunlop |Wide-moat Domino's posted impressive first-quarter results, with midteens system sales growth (15% in the U.S. and 18% abroad) driving a modest earnings beat. While the market response was initially tepid, we believe that April 29's subsequent rally (up about 2%) more accurately reflects the firm's underlying strength, with strong net unit openings, volume retention in markets where dine-in restrictions have softened, and stable service times (despite labor market tightness) representing a pleasant surprise for investors. Though we plan to raise our fair value estimate to $350 per share from $340, we believe the shares look rich, trading at roughly an 18% premium to our updated valuation.