Article

Domino's, Pizza Hut parent see nice stock price hikes

As gas prices show signs of starting to stabilize, most of the major pizza players enjoyed higher stock prices last week.

Image via iStock.com

September 9, 2019 by S.A. Whitehead — Food Editor, Net World Media Group

While most of the Big 3 pizza brands enjoyed higher stock prices during trading last week, commodity prices were rising or, in the case of those recently plummeting fuel prices, stabilizing. 

Cheese 

In cheese trading on the Chicago Mercantile Exchange last week, barrels closed at $1.77, while 40-pound blocks ended the week at $1.88. The weekly average for barrels was up 4 cents to $1.74, while blocks were up a penny to $1.88, according to the U.S.D.A. Agricultural Marketing Service. 

For all those increasing numbers of pizza brands that include cheddar among their toppings, on the Chicago Mercantile Exchange, prices for that variety are actually up, and in fact, nearing a the $1.90 point, which they have not reached since November 2016. 

Even with the relatively higher market prices, cheese demand is strong in the Midwest and East, buoyed by school food service purchasing. Overall, cheese stocks are available, but they are not at the daunting levels of previous years, the U.S.D.A. said.

Wheat

Cash bids for wheat were mixed last week, with wheat export sales showing an increase of 11.5 million bushels for 2019-20, which were included in the latest report.

Wheat ranged 10 3/4 cents lower to 15 cents higher, the U.S.D.A. said, with Kansas City U.S. No. 1 Hard Red Winter, ordinary protein rail bid was 10 3/4 cents lower, from $4.63 3/4-$4.73 3/4 per bushel. Kansas City U.S. No. 2 Soft Red winter rail bid was not quoted. 

St. Louis truck U.S. No. 2 Soft Red Winter terminal bid was 3 cents lower to 4 cents higher, from $4.68-$4.76 per bushel. Minneapolis and Duluth U.S. No. 1 Dark Northern Spring, 14.0 to 14.5 percent protein rail, was 1/2 to 5 1/2 cents higher, from $5.87-$5.92 per bushel. Portland U.S. Soft White wheat rail was steady to 15 cents higher, from $5.70-$5.75 per bushel.

Vehicle fuel

Pump prices appeared to be stabilizing as crude stocks fell by some 4.8 million barrels last week, according to the U.S. Energy Information Administration's latest report. But, despite the drop to 423 million barrels, stocks are approximately 21.5 million barrels higher than were they were at the end of August 2018. 

Those higher inventory levels have contributed to cheaper crude prices, helping to keep gas prices less expensive than last summer. If crude inventories remain high, especially as gasoline demand drops with the fall driving season, pump prices could be as cheap as $2.40 this fall, according to the American Automobile Association. 

As it is, the national average paid for a gallon of regular this morning was $2.56, AAA reported. That's a penny less than last week and 10 cents lower than last month, but a smile-inducing 29 cents cheaper than what we paid this time last year. Mid-grade ($2.90) and premium ($3.16) followed the same downward trajectory, though not as steeply. At $2.92 a gallon, diesel also remains markedly cheaper than last month and year, but the difference in savings was less significant for E85, which at $2.27 this morning, was down just 7 cents from last month and 16 cents from last year. 

Natural gas

Natural gas spot prices rose at most locations for the most recently reported week that ended on Sept. 4. Henry Hub spot prices rose by 8% from $2.24 per million British thermal units (MMBtu) to $2.42/MMBtu over that period, according to the U.S. Energy Information Administration.

At the New York Mercantile Exchange, the September 2019 Henry Hub natural gas contract expired at $2.251/MMBtu last week. The October 2019 contract increased to $2.445/MMBtu, up 22 cents/MMBtu over the seven days. The price of the 12-month strip averaging October 2019 through September 2020 futures settlement prices climbed 10 cents/MMBtu to $2.474/MMBtu.

Net injections to working gas totaled 84 billion cubic feet (Bcf) for the week ending Aug. 30. Working natural gas stocks are 2,941 Bcf, which is 15% more than the year-ago level and 3% lower than the five-year (2014-18) average for this week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 19 cents/MMBtu, averaging $4.56/MMBtu for the seven-day period. The price of natural gasoline rose by 1%, ethane by 12%, propane by 1%, butane by 5% and isobutane by 6%.

According to Baker Hughes, for the week ending Tuesday, Aug. 27, the natural gas rig count remained flat at 162. The number of oil-directed rigs fell by 12 to 742. The total rig count decreased by 12, and it now stands at 904.

Pizza company stocks

Two of the three largest publicly traded U.S. pizza stocks fared particularly well in trading last week, with just Papa John's showing a slight decline in value after a substantial boost a week earlier. 

Domino's, which has been the subject of a lot of online chatter over the last week, saw a nice increase in its value from $226.84 on the Friday before Labor Day, up to $237.35 at the close of trading Friday. 

Yum Brands, parent company of competitor, Pizza Hut, also saw a nice rise in value over the week, closing Friday at $119.21, up from $116.78 a week earlier. 

In fact, Louisville-based Papa John's was the only player to see its stock bump downward a bit last week, when it closed Friday at $49.63, off 13 cents from the previous week's close of $49.76. 

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.