Domino’s Pizza, Inc. (NYSE:DPZ) and International Speedway Corp (NASDAQ:ISCA) both reported earnings this morning. Domino’s Pizza missed revenue and earnings expectations and is down by 4.5% in pre-market trading, while International Speedway Corp beat revenue and earnings expectations and is unchanged in the pre-market session. Let’s take a closer look at their earnings reports and examine what the smart money thinks of the two companies.
Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. However, our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that a particular type of hedge funds’ long positions actually outperformed the market. The 15 most popular small-cap stocks among funds beat the S&P 500 Index by more than 60 percentage points since the end of August 2012. These stocks returned a cumulative of 118% vs. a 58% gain for the S&P 500 Index (read more details). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).
For its third quarter, Domino’s Pizza, Inc. (NYSE:DPZ) earned $0.67 per share on revenues of $484.7 million, missing earnings expectations of $0.74 per share on revenues of $487.05 million. Domestic same-store sales increased by 10.5%, while international same-store sales increased by 7.7%. The company added 194 stores to its total in the quarter and repurchased 365,460 shares. Operating margin declined by 0.6% to 29.3%.
While the third quarter results led to a bad earnings report, one weak quarter isn’t exactly cause for alarm. A little consolidation would be healthy for the stock. Domino’s Pizza has had a good run from its 2010 base as the U.S consumer bounces back. The stock trades at a relatively high forward P/E of 26.89 and could take a few quarters to grow into its valuation, however.
Follow Dominos Pizza Inc (NYSE:DPZ)
Follow Dominos Pizza Inc (NYSE:DPZ)
Our data shows that hedge funds were bullish on Domino’s Pizza, Inc. (NYSE:DPZ) in the second quarter. Of the 730 elite funds that we track, 23 reported holding stakes in Domino’s worth $1.18 billion as of June 30, representing 18.80% of the float, versus 22 funds and $975.14 million a quarter earlier. Jim Simons‘ Renaissance Technologies decreased its position by 4% to 3.34 million shares while Dmitry Balyasny’s Balyasny Asset Management increased its stake by 134% to 437,380 shares. Cliff Asness’ AQR Capital Management raised its holding by 6% to 395,977 shares.
