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Domino’s Costs Are Rising, but You Shouldn’t Worry

It isn’t an everyday occurrence that a company reports strong revenue and profit gains and experiences a sharp decrease in the stock price, falling 7% for the day. Yet that’s exactly what happened after Domino’s Pizza (NYSE:DPZ) released its fiscal third-quarter 2020 results, which covered the period that ended on Sept. 6.

This seemingly incongruous situation may leave you scratching your head. So it’s a good time to look deeper into the report to see if there is anything that’s concerning.

A man in a red shirt and hat is holding two pizza boxes.

Image source: Getty Images.

Demand remains strong

With strong roots in delivering pizzas that go back to its founding 60 years ago, it shouldn’t surprise anyone that Domino’s has done well during the pandemic. Excluding foreign exchange translations, its third-quarter total sales grew by nearly 15%. Broken out geographically, U.S. same-store sales (comps) rose by 17.5% and were more than 6% higher internationally.

It is not merely the pandemic that is boosting sales, however. Domestic comps have increased for 38 straight quarters, and international operations have increased for 107 consecutive quarters.

Domino’s provides inexpensive offerings, which go beyond pizza to include items such as chicken, sandwiches, pasta, and desserts. It also constantly tinkers and updates its menu. For instance, it launched a chicken taco pizza and cheeseburger pizza during the summer. As the results show, its prices and products are resonating with customers.

Some investors were disappointed that the sales weren’t as robust as those of Papa John’s International (NASDAQ:PZZA). But it’s hard to make a judgment about one quarter, and besides, Domino’s showed excellent sales growth over an extended period.

Higher costs

Investors also didn’t like the elevated expenses during the quarter, caused primarily by higher wages and sick pay for Domino’s store employees due to the pandemic.

This doesn’t concern me, though. For starters, despite increased expenses, Domino’s earnings per share jumped up by 21.5% compared to the year-ago period to $2.49.

True, this was below the $2.79 consensus estimate, but how can you feel disappointed about a greater than 20% growth in earnings? As long as consumers keep clamoring for Domino’s products, and it continues its string of comps increases, there’s nothing to suggest otherwise — it will leverage these expenses. In other words, sales growth will outpace the cost increases in the future. With strong demand for its products, Domino’s could also pass the higher expenses along via price hikes.

Perhaps the biggest problem in the minds of investors was the stock price’s big run-up this year, which created high growth expectations. Before the price drop after the earnings release, Domino’s shares were up nearly 50% this year.

The stock market can get fickle. But for long-term investors, you shouldn’t get too caught up in the short-term price movements. Domino’s is an excellent business that has produced steadily higher sales and earnings. As the pandemic and subsequent economic fallout have shown, people will keep ordering pizza and other food from Domino’s even when times get tough.

With the stock’s sharp sell-off, now is an

Metro Denver counties with rising COVID-19 cases hope public education, targeted orders will stave off new stay-at-home mandates

New COVID-19 cases have increased in much of the Denver metro area, and county health departments are trying to persuade their residents they need to keep their distance to avoid new stay-at-home orders.

The Colorado Department of Public Health and Environment’s new dial framework places each county in one of five color-coded levels, with increasing restrictions on business capacity and event sizes.

Each county’s level is based on the rate of new cases compared to population, the percentage of COVID-19 tests coming back positive and how hospitalizations are trending.

As of Friday, 15 counties, or almost one-quarter of the state’s counties, had rates of new cases that could push them to issue additional restrictions if nothing changes. They get at least two weeks to bring the numbers down before more restrictions are on the table, though.

Unlike this spring, when businesses across the state were ordered to shut down, counties are trying to avoid closing large numbers of facilities through awareness campaigns, or targeting orders at populations where the virus is spreading more freely.

John Douglas, executive director of the Tri-County Health Department, said it appears private gatherings are causing a significant portion of the spread in Adams, Arapahoe and Douglas counties. It’s difficult to be sure, though, because not everyone is cooperating when contact tracers call, he said.

Counties could take action if they get multiple complaints about a household hosting unsafe numbers of people, but most of their efforts are focused on convincing people to wear their masks and keep their distance from others until a vaccine is approved, Douglas said. People are tired of social distancing, but sticking with it increases the odds of avoiding a winter surge and new stay-at-home orders, he said.

“The higher we are through the month of October and early November, the worse shape we’ll be in by Thanksgiving and Christmas,” he said.

Nathan Fogg, director of emergency management for Arapahoe County, said metrics like hospitalizations and test positivity are relatively low, so it’s not necessary to put restrictions on businesses at this point.

Earlier this year, Arapahoe County had an increase tied to outbreaks at businesses, which came down after officials targeted messages about the public health guidelines and resources to help meet them to hot spots, Fogg said. This time, they’re relying more on traditional and social media to reach individuals, he said.

“This one, I think, is going to be more about getting back to basics,” he said.

Adams County posted a warning on its website Thursday, stating that if cases aren’t brought under control, the county could move into the second-highest (orange) level, requiring gyms to close and restaurants to reduce their capacity. It urged residents to avoid even small indoor gatherings, unless absolutely necessary.

“We have been told by the state that if we don’t reverse these alarming trends, we are at risk of further restrictions,” County Manager Raymond Gonzales said in the posted statement. “After six months of dealing with COVID-19, we all know there is

World University Rankings: China is Rising, Europe is Falling, and U.S. Still On Top

Students walk past Wadham College, Oxford University, ahead of the new academic year, amid the coronavirus pandemic in Oxford, Britain, September 17, 2020. (Toby Melville/Reuters)

The Times Higher Education released their World University Rankings for 2021 last month, revealing a few interesting global trends in tertiary schooling.

The University of Oxford has taken the top spot for the fifth year in a row, with Stanford, Harvard, Cal Tech, and M.I.T. rounding out the top five. 

Two of the most interesting stories from this year’s ranking, however, involve the ascendancy of Chinese universities and the decline of those on the European continent. Tsinghua University and Peking University both continue their climb up the rankings, placing 23rd and 24th, respectively. Meanwhile, the European Union can now boast only six of the top 50 universities on the list. This amounts to yet more evidence that the E.U. Commission’s dream of a pan-continental super-state capable of geopolitical rivalry with The U.S. and China is, like Napoleon out of Moscow, receding into the distance. It’s very difficult to achieve and maintain superpower status without global academic supremacy, and we have no reason to think that an ageing, desiccated, and dying Europe is likely to buck this trend. A broad-based brain trust of home-grown, world-beating intellects has been a hallmark of every global hegemon in world history: It’s the sine qua non of geopolitical ascendency in the modern world. 

Which brings us to the United States. By far one of the most infuriating trends on the American right is the prevalent tendency among conservatives to bash and denigrate America’s elite universities. It’s true that they skew left, but so what? Most of the damage done in terms of left-wing worldview indoctrination is accomplished well before kids reach university, in American public schools. If, by the time a student reaches the age of 18, his or her parents are worried that an Ivy League education might radicalize them, then the parents in question probably haven’t educated their children well enough to begin with. Research has born out the fact that, where ideological commitments are concerned, by time freshman year at college begins, the horses have — for the most part — already left the stables. 

Besides, there is hardly a single field in which American Exceptionalism and global dominance is in ruder health than in higher education, as this year’s rankings demonstrate. Nineteen of the top 30 schools on the list are American and only the usual cream of the British crop prevents the USA from having a complete monopoly on the Top 10. 

Conservatives who are convinced of America’s unique greatness shouldn’t let party politics prevent them from acknowledging those areas in which America is uniquely great. Higher education is indisputably one of these areas, and yet conservatives are simply not interested in their country’s achievements in this area. It’s true that most of the faculty and graduates that these schools turn out are progressives, but they’re nevertheless American progressives. The fact that they put their

AG Grewal: Anti-bias education will help us fight a rising tide of hate | Opinion

By Gurbir Grewal and Rachel Wainer Apter

At last week’s presidential debate, when it seemed that the nation had exhausted its capacity for shock, President Trump hit another height in racist rhetoric, refusing to condemn white supremacy while urging far-right extremists to “stand back and stand by.” As the top officials responsible for enforcing the civil rights laws of New Jersey — one of the most populous and diverse states in the country — we have seen firsthand how the president’s push to normalize bias has led to a rising tide of hate and violence in our state.

Since 2015, the number of bias incidents being reported to law enforcement in New Jersey has skyrocketed. There were 367 reported incidents in 2015, compared to 994 in 2019 — a 170% increase. And this isn’t a problem limited to older generations — fully 46% of bias offenders were younger than 18 years old, a loud alarm that New Jersey’s diversity is not translating to tolerance in its schools.

Every one of these bias incidents is an affront to our values. Each represents a target on the back of a fellow American or resident based only on what they look like, where they come from, how they worship, or who they love. All too often, a bias incident not only traumatizes an individual but also terrorizes entire communities, as when two attackers fueled by hate planned a shootout at a kosher grocery store in Jersey City, ultimately killing several of our fellow New Jerseyans, including a police officer.

The Trump administration has shown that it is disinterested in fighting discrimination, so in New Jersey, we decided it was time to step up and take aggressive action ourselves. Last year, Gov. Phil Murphy created a task force to address the dramatic increase in reported bias incidents, especially among children and young adults. Today, we are proud to release the task force’s final report, which sets out a groundbreaking vision for how New Jersey, along with other states, can systematically root out discrimination among young people, and stem the tide of hate before it poisons future generations.

If adopted, the task force’s recommendations will fundamentally re-imagine the role of the state’s education system and law enforcement institutions in fighting bias. New Jersey would become the first state in the country to require comprehensive anti-bias training for educators and school staff — not just implicit bias training, but also training on the institutional bias and structural bias that still shapes the landscape of the state today.

It would similarly mandate new school curricula to provide dedicated anti-bias education to every K-12 student in the state. And New Jersey would adopt among the toughest hate crimes laws in the nation, along with a new online system for reporting bias incidents to the Attorney General’s Office for civil or criminal investigation.

Central to the task force’s work was the recognition that children do not just wake up one day and decide to commit a hate crime. Instead,