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Pizza trading mega-movement sees Domino's stay aloft, while competitors sink

What's going on with pizza stock trading lately? The last two weeks have left more than a few stumped as the value of mega-player Domino's stays well above the recent average for that stock, while Papa John's and Pizza Hut parent, Yum, falter.

Photo: iStock

March 2, 2020 by S.A. Whitehead — Food Editor, Net World Media Group

Volatile is probably an understatement when referring to the public trading of large pizza brands the last 1½ weeks when — following a positive quarterly financial report — Ann Arbor, Michigan-based, Domino's soared in trading from $297.10 at the close on Wednesday, Feb. 19, to $369.40 the next morning on Feb. 20, immediately following its 7 a.m. release of financials, which made public a 20% increase in the stock's dividend over the quarter. By Friday, this week, that enormous price hike had settled down slightly to close at a still very healthy $339.46 for the week, well above the stock's average in recent months in the $250 to $294 range. 

But even as that mega-brand passed out smiles to investors, other major players on the market reported lower values over that same 10 days, with Louisville, Kentucky-based Papa John's closing down $11.59 over the week, last Friday at $57.61, after a significant drop from the close on Tuesday last week when the stock was up to $67.51, to open Wednesday at $61.48 when the brand reported its quarterly and annual financials. 

At multi-brand and Pizza Hut parent, Yum! Brands, Inc., the company's stock value also took a dive all week, but particularly between Thursday afternoon when the stock closed at $96.22, to open on Friday at $89.50. The brand closed Friday at $89.25, down $14.25 on the week. 

Finally, the much smaller double-pizza brand parent company, Rave Restaurant Group, Inc. — the parent company for Pie Five and Pizza Inn — also dropped in value all week from $1.41 at the close on Friday, Feb. 21, to $1.25 last Friday. 

Cheese

On the cheese markets, the divergence in price that has had producers and others worried stabilized last week slightly with the average price for barrels on the Chicago Mercantile Exchange up less than a cent to $1.59 and the average price for 40-pound blocks down five cents to $1.75. Barrels closed at $1.59, while 40-pound blocks closed at $1.72, according to the U.S. Department of Agriculture Marketing News Service. 

Cheese production was mostly busy with ample milk supplies nationally and cheese makers running near to, or at capacity. Cheese sales were mixed, as inventories were reported as growing. 

Spot milk prices ranged from $1 to $5 under class, falling at least $1.50 below the previous years' ninth week minimum. Cheese market tones, like most dairy and other agricultural commodity markets in the midst of the coronavirus concern, were shaky, the U.S.D.A. said. 

Wheat

Compared to last week, cash bids for wheat were mostly lower, with wheat export sales reportedly having increased 14 million bushels for 2019-20, according to the U.S.D.A. Wheat was 56 cents lower to 9 1/2 cents higher overall. Kansas City U.S. No. 1 hard red winter ordinary protein rail bid was 29 cents lower, from $5.24 3/4-$5.34 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 56 cents lower at $5.64 per bushel. Minneapolis and Duluth U.S. No. 1 dark northern spring, 14%-14.5% protein rail, was 1/2 cent lower to 9 1/2 cents higher, from $6.54-$6.64 per bushel. Portland U.S. Soft White wheat rail was 7-8 cents lower, from $6.12-$6.18 per bushel.

Vehicle fuel 

Over last week, the national average for a gallon of regular unleaded gasoline fell by two cents to $2.45, which the U.S. Energy Information Administration indicates is likely due to the fact that total domestic gasoline supplies remain high, despite a significant 2.7 million draw in stocks. At 256.4 million barrels (bbl), domestic supply registers at 1.4 million bbl more than 2019's level at this time. 

That higher stock level has helped to push pump prices lower across the country as crude oil remains cheap, according to the American Automobile Association. This trend is likely to continue through the end of the winter driving season. But AAA said that the refinery maintenance starting now nationally will probably put pressure on regional refinery utilization, supply and gas prices in early March.  

Likewise, AAA said that as cases of the coronavirus increase around the world, crude prices have decreased significantly. The market continues to worry that the impact of the virus will lead to a reduction in global economic growth, since crude demand is expected to drop due to an anticipated slowdown in international travel and China's crude consumption declining. 

At the close of Thursday's formal trading session on the Nymex, West Texas intermediate crude oil, which is often used as a benchmark in oil pricing, dropped by $1.64 to settle at $47.09 — the lowest price crude has hit since early January 2019. Until it appears that the international public health threat from the virus decreases and China's industrial sector recovers from the impact of the virus on production, crude prices are likely to continue facing downward pressure, AAA said. 

Currently, the average price of a gallon of regular, according to AAA, is $2.44, down three cents from a week and a month earlier. Mid-grade ($2.78) and premium ($3.04) were also down four cents and three cents, respectively. Fluctuations in diesel were slightly less on the week, with the average price now at $2.85 a gallon, two cents lower than last week, but a healthy 11 cents under the price paid a month ago. And E85 has seen even greater reductions in price than all the gas grades and diesel, with the average price today at $2.16 a gallon down four cents from the previous week and almost six cents from last month.  

Natural gas

Natural gas spot prices also fell at most locations for the latest report week that ended Wednesday, Feb. 26, according to the U.S. Energy Information Administration. The Henry Hub spot price fell from $2.02 per million British thermal units (MMBtu) to $1.92/MMBtu over that same period.

At the New York Mercantile Exchange, the March 2020 contract expired at $1.821/MMBtu, down 13 cents/MMBtu from the previous week. The April 2020 contract price decreased to $1.837/MMBtu, also down 13 cents/MMBtu over the same period. The price of the 12-month strip, average April 2020 through March 2021 futures contracts declined eight cents/MMBtu to $2.171/MMBtu.

The net withdrawal from working gas totaled 143 billion cubic feet (Bcf) for the week ending Feb. 21. Working natural gas stocks totaled 2,200 Bcf, which is a significant 41% more than the year-ago level and 9% more than the five-year (2015–19) average for this week.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by nine cents/MMBtu, averaging $4.64/MMBtu for the week ending Feb. 26. The prices of natural gasoline and butane fell by 4% and 1%, respectively. The prices of propane and isobutane rose by 8% and 4%, respectively. The price of ethane remained flat week over week.

According to Baker Hughes, for the week ending Tuesday, Feb. 18, the natural gas rig count remained flat at 110. The number of oil-directed rigs rose by one to 679. The total rig count increased by one, and it now stands at 791.

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.