In his first "Executive Decision" segment of Mad Money Thursday night, Jim Cramer spoke with Rich Allison, CEO of Domino's Pizza Inc. (DPZ) , the pizza chain that saw its shares plunge 6.9% Thursday after reporting a strong quarter with lighter-than-expected earnings.
Allison said he was very pleased with Domino's 17.5% same-store sales growth, but admitted that it is more expensive to operate a restaurant in a Covid-19 world. He said personal protective equipment, additional cleaning measures and an increase in cheese prices all led to lower earnings.
Outside of the uptick in expenses, Allison painted a bullish picture for Domino's. Domino's also continues to embrace technology. Allison noted that adding GPS locations for their drivers allows stores to run even more efficiently.
Let's check and see if all this innovation can help the charts.
We looked at the charts on Oct. 5 ahead of earnings and wrote that, "My job would be easier if all stocks continued to perform like DPZ. Continue to hold previous long recommendations. Raise stop protection to a close below $390. The round number of $500 and $526 are the price targets for now."
In the daily bar chart of DPZ, below, we can see that the shares gapped lower Thursday and closed below the rising 50-day moving average line. Prices closed nearer to the middle of the daily range so we know that there was some buying on the weakness. A close at the low of the day would be more negative. Prices stopped above what should be a support area -- the $390-$375 area.
The On-Balance-Volume (OBV) line dipped Thursday with the lower close but we do not see a pattern or trend of aggressive selling leading up to the earnings announcement. The Moving Average Convergence Divergence (MACD) oscillator narrowed but has not yet crossed to the downside.