Here's Why Domino's Pizza, Inc. Shares Gained 16.8% in February

Even the Noid could not hold Domino's down in February.

What: While the pizza-ruining mascot has actually been out of commission since 1989 when the character was dropped after an unfortunate kidnapping scandal, the chain has persevered in a crowded space. February turned out to be an especially solid month for the company which saw its shares rocket upward after it reported results on Feb. 25.

Domino's stock closed on Jan. 29 at $113.93 and finished the month at $133.04, a 16.8% gain, according to data provided by S&P Global Market Intelligence.


So what: Domino's saw domestic same store sales climb by 10.7% in Q4 versus the same period in 2014 and 12% for the full year. The chain's international division also posted strong results, with same store sales growth of 8.6% during the quarter and 7.8% for the full year.

"On an as-reported basis, fourth quarter diluted EPS was $1.18, up 38.8% over the prior-year quarter; full year diluted EPS was $3.47, up 21.3% over the prior year," the company wrote in its earnings release.

Management also pointed out that the numbers would have been stronger, but diluted EPS for both the fourth quarter and fiscal year was negatively affected by expenses related to the company's recapitalization that finished in Q4. On the plus side the quarter did benefit from having an extra week over the previous year. Still, even with the positive and negative adjustments fourth quarter diluted EPS was $1.15, up 26.4% over the prior-year quarter; full year as-adjusted diluted EPS was $3.45, up 19.% over the prior year.

Domino's added 901 stores in 2015, 133 new domestic locations and a company-record 768 new international stores.

So what: For a brand that has been around as long as Domino's these are massive growth numbers both for the quarter and the year. The company has clearly proven that despite heavy competition from other low-price pizza chains and pressure from fast-casual pizza offerings on the higher end, that it still has an appealing offer for consumers.

Most encouraging might be the company's continued international success where it has posted an astounding 88 consecutive quarters of positive same store sales growth, according to the earnings release.

Now what: The pizza purveyor posted pretty spectacular Q4 and full-year results and its CEO seems encouraged.

"Our network of strong franchisees has become even more profitable during these years of continued positive same store sales growth," said J. Patrick Doyle, Domino's President and Chief Executive Officer. "Great store economics around the world have led to accelerated unit growth. It's a positive cycle and the momentum continued through 2015."

And, going forward there is no reason to believe momentum will not continue into 2016. Domino's has shown that it can avoid the problems most fast food companies dealt with last year. It also proved that higher-end fast casual competitors won't damage its business the way they did to other quick-serve chains.

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Daniel Kline has no position in any stocks mentioned. He owns a stuffed Noid. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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