Domino's Pizza (DPZ) rallied about 5% right out of the gate Tuesday morning, as Wall Street cheered the food firm's latest earnings report.

For the third quarter, DPZ earned $16.6 million, or 27 cents per share, while revenue climbed 14.8% to $347.4 million. Both figures topped analysts' consensus estimates, which called for a profit of 25 cents per share on $335.9 million in revenue.

Analyst Upgrades

• Deutsche Bank upgraded Dr Pepper Snapple (DPS) to buy from hold based on valuation. The firm keeps a $39 target on the stock.
• Piper Jaffray upgraded Kenexa (KNXA) to overweight from neutral, citing a strengthening of trends for the company. The firm has a $29 price target on the stock.
• Janney Montgomery upgraded Gaylord Entertainment (GET) to buy from neutral on expectations the company will benefit from strong trends in 2011. The firm raised its target for shares to $35 from $32.50.
• MeadWestvaco (MWV) was upgraded to outperform from neutral at Credit Suisse.
• EADS (EADSY) was upgraded to overweight from neutral at JPMorgan.

There is a decidedly global flavor to KFC, Taco Bell and Pizza Hut restaurants lately. And no, we're not talking about the Chalupa Baja -- this is about a global sales for these franchises and their parent company.

In recent years, operator Yum! Brands (YUM) has been growing at a breakneck pace, now with more than 3,500 locations in China alone and plans to open another 900 restaurants outside the U.S. in 2010. And the next global market that is in its sights is the United Kingdom, with a Taco Bell in Essex set to peddle low-priced burritos by the end of June.

Here are some highlights from last week's earnings coverage from BloggingStocks:

• Abbott Laboratories (NYSE: ABT) higher Q3 earnings topped expectations but revenue was in line.
• Advanced Micro Devices Inc. (NYSE: AMD) posted better-than-expected Q3 results, but shares sold off.
• Allegheny Technologies Inc. (NYSE: ATI) was downgraded on concerns about its Q4 guidance.
• Bank of America Corp. (NYSE: BAC) shares fell after it posted a deeper-than-expected quarterly loss.
• Citigroup Inc. (NYSE: C) fell victim to profit taking despite reporting better-than-expected earnings.
• CSX Corp. (NYSE: CSX) better-than-expected Q3 earnings sent shares higher, despite a decline in revenue.

The shares of Domino's Pizza (NYSE: DPZ) gapped sharply lower this morning, despite a stronger-than-expected third-quarter profit. Ahead of the bell, Domino's reported net income of $17.8 million, or 31 cents per share, for the quarter ended Sept. 6. Excluding a $14.3 million pretax gain, Domino's profit of 17 cents per share was two cents better than analysts expected.

However, revenue for the period tumbled 6.5% to $302.7 million, falling well short of consensus estimates for $308.9 million. Same-restaurant sales were flat in the U.S., although they were up 2.7% internationally. With top-line results softer than expected, the pizza chain cited lower interest expense and tighter cost controls for the robust bottom-line results.

TheStreet.com's Jim Cramer says Panera is one company that has plenty of room for expansion.

If the restaurant stocks are stabilizing after a real downturn that has lasted for several weeks, this group -- a leadership group from the fall when gasoline fell in price -- is going to have a wicked move back.

I like Yum! Brands (NYSE: YUM) (Cramer's Take), which never broke down. This is one in which technicians signaled weakness, with Top Gun Rick Bensignor and I going head to head on "Mad Money." He was right that it initially would downtick, but I think it is bottoming along with McDonald's (NYSE: MCD) (Cramer's Take). It's got the growth and it has good tumbling raw costs. The dollar's going the way for both stocks.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Bristol-Myers Squibb Co. (NYSE: BMY) Q1 profit fell despite strong sales of Plavix and Abilify.
• Check Point Software Technologies Inc. (NASDAQ: CHKP) was downgraded based on its guidance.
• Domino's Pizza Inc. (NYSE: DPZ) strong Q1 results were boosted by early debt retirement.
• DreamWorks Animation SKG Inc. (NYSE: DWA) strong Q1 results were driven by Madagascar 2.
• Endo Pharmaceuticals Holdings Inc. (NASDAQ: ENDP) Q1 results led to an analyst's downgrade.
• E*Trade Financial Corp. (NASDAQ: ETFC) widened its Q1 loss, sending shares sharply lower.

Domino's (NYSE: DPZ) first quarter earnings report showed that the company is weathering the recession to date better than analysts had expected. Net income was up 245% over fourth quarter 2008, and 168% over same quarter a year ago.

However, this and the earnings per share of 41 cents were inflated by $21.2 million realized from early debt retirement. Without this, EPS would have come in at 20 cents, still above analysts' expectations of 17 cents but down by a penny from the first quarter of 2008.

The company jumped at the chance to retire $43 million of 5.261% fixed-rate notes for $22.3 million of cash on-hand and very cheap money draw from its revolving bank account. Continuing on that course, Domino's has already retired an additional $25 million that will show as $12.9 million to the good in the next quarter's earnings.

Corporations spend millions of dollars in advertising to carefully cultivate a brand and image, yet all that money can be for naught when a couple of trashy employees take it upon themselves to post a video on Youtube showing them deliberately sneezing and farting on the food they are about to serve.

Domino's (NYSE:DPZ), the nation's second largest pizza chain with over 8,700 locations in 60 countries, is suffering such an assault at the moment.

The video is narrated by a young lady who takes obvious delight in ridiculing the company and its customers. One has to wonder what goes through the mind of an employee who, despising the company, continues to take the paycheck rather than move on. It's not as though Domino's is the only low-wage job on the market, even in these hard times.

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.

How to compare the two dominant pizza brands, Yum! Brands Inc.'s (NYSE: YUM) Pizza Hut vs. Domino's Pizza Inc. (NYSE: DPZ)?

Most annoying ads? The wing man series by Pizza Hut is a recent annoyance, but Domino's still, in my mind, has not lived down the ignominy of its Noid commercials in the 1980s.

Most obscene side-dishes? What in the hell are dipping strips? Like we don't realize they're just pizza dough with goo indistinguishable from the plaque clogging our arteries. Bad Pizza Hut! Bad!

Size? Pizza Hut -- 12,800 outlets in 90 countries. Domino's -- 8,624 outlets in 55 countries.

MOST NOTEWORTHY: Analog Semiconductors, OrthoVita and First Solar were today's noteworthy initiations:

• Morgan Stanley initiated Analog Semiconductors with an In Line rating. The firm assumed National Semiconductor Corp (NYSE: NSM) with an Overweight rating and $26 target and is the firm's top pick; Analog Devices (NYSE: ADI) and Linear Tech (NASDAQ: LLTC) were initiated with Equal Weight ratings and a $32 target and $34 target, respectively.
  
• Barrington believes OrthoVita (NASDAQ: VITA) is the market share and technological leader of the biomaterials market. The firm assumed shares with an Outperform rating and $4 target.
  
• Canaccord Adams believes First Solar's (NASDAQ: FSLR) management and business model are among the best of any PV company and that execution has led to strong profitability plus a successful aggressive capacity ramp. Shares were started with a Buy rating and $325 target.

OTHER INITIATIONS:

• Morgan Stanley initiated Yum! Brands (NYSE: YUM) and Domino's Pizza (NYSE: DPZ) with Equal Weight ratings and targets of $40 and $15, and also initiated McDonald's (NYSE: MCD) and Burger King (NYSE: BKC) with Overweight ratings and targets of $65 and $34.
  
• Lehman initiated Alcoa (NYSE: AA) with an Overweight rating and $44 target.

Another earnings season crunch is under way, and here are a some highlights of this past week's earnings coverage here at BloggingStocks:

• Advanced Micro Devices (NYSE: AMD) reported losses 9 cents greater than Wall Street estimates.
• Altria Group Inc.'s (NYSE: MO) profits were down, but the company raised its full-year earnings guidance.
• Bank of America Corp. (NYSE: BAC) fell short of expectations, profits down 32%.
• Boston Scientific Corp. (NYSE: BSX) almost tripled Wall Street's earnings estimates.
• Citigroup Inc. (NYSE: C) had warned to expect a disappointing results, and earnings per share fell 57%.
• Coca-Cola Co. (NYSE: KO) beat estimates, sending the share price to a 52-week high.
• Domino's Pizza Inc. (NASDAQ: DPZ) fell short of expectations, profits falling 55%.
• eBay Inc.'s (NASDAQ: EBAY) otherwise good results were hurt by Skype-related losses.
• Gannett Inc.'s (NYSE: GCI), earnings beat expectations but revenue fell short.
• Genetech Inc. (NYSE: DNA) beat estimates by a penny, but analysts' concerns linger.
• Google Inc. (NASDAQ: GOOG) had a spectacular third quarter. See our live blog of the conference call.

The stock market had its biggest drop today in a month as investors absorbed a plethora of earnings disappointments, cuts in profit outlooks and pessimistic comments about the economy.

The statistics speak for themselves. The Dow Jones industrial average fell more than 340 points. Bloomberg News notes that, "Ten industry groups in the S&P 500 decreased today, with 458 of the index's members posting declines. Thirteen stocks dropped for every one that gained on the New York Stock Exchange."

Bad news was so plentiful today that it's tough to single out one reason for the market's sell-off.
Caterpillar Inc. (NYSE: CAT) reported disappointing results and lowered its earnings forecast. Honeywell Inc. (NYSE: HON) spooked investors with talk of slowing growth. Shares of Schlumberger Ltd. (NYSE: SLB) fell after the oil field services company said it drilling projects would be delayed. Even shares of 3M Co. (NYSE: MMM), which reported better-than-expected results, got sucked into the downward spiral as investors were concerned about a planned price cut for its optical films.

Then there's the continued worry about consumer spending that hurt companies ranging from Harley-Davidson Inc. (NYSE: HOG) to Domino's Pizza Inc. (NYSE: DPZ) to Hershey Co. (NYSE: HSY) this week. Financial shares continue to get pummeled on concerns about the subprime mortgage meltdown. Wachovia Corp. (NYSE: WB) reported ugly earnings earlier today. About the only sector that seems to be holding on is tech, thanks to yet another blowout quarter from Google Inc. (NASDAQ: GOOG).

Wall Street isn't just worried about the future, it's nearly petrified waiting for the next shoe to drop from the flow of earnings reports coming over the next few weeks. Pundits, such as David Joy of RIverSource Investments, weren't expecting things to get better anytime soon.``When you have earnings expectations that are negative going into the third-quarter reporting season and you start to get some disappointments on top of that after five years of double-digit earnings growth, this market's going to struggle,'' Joy told Bloomberg News.

Manic Monday meet Twisted Tuesday.

The Dow Jones industrial average is down 85 points to 13,899, rebounding from earlier lows (1:15 p.m.). The market is moving for lots of reasons including Ben Bernanke's pessimistic view of the housing market and a drumbeat of disappointing results from companies including Wells Fargo & Co. (NYSE: WFC) along with comments from home-builder D.R. Horton Inc. (NYSE: DHI) indicating tighter availability of mortgages. Ericsson AB (NASDAQ: ERIC) plunged after reporting worst-than-expected results as did ValueClick Inc. (NASDAQ: VCLK).

I almost forgot to mention skyrocketing oil prices that seem headed to $100 per barrel and beyond, which helped push up the big oil companies including ExxonMobil Corp. (NYSE: XOM).

Domino's Pizza, Inc. (NYSE: DPZ) saw its Q3 profit drop by a staggering 55% as reported this morning. Domino's management explained the root causes as weak consumer spending added with cost pressures. Cost pressures? Apparently, either the cost of making pizza has changed big-time in the last three months, or gas prices and commodity food product prices have gone up. I'll take the latter -- you?

For the Q3 period, Domino's net income dropped to $10.99 million or $0.17 per share from $24.5 million or $0.39 per share in the year-ago quarter. Most analysts expecting about $0.23 EPS. The food company's quarterly revenue rose 3.2% to over $337 million as international sales became the star of the quarter. CEO David Brandon suggested that trying to mix increasing prices with declining traffic was a challenge in the quarter. Also mentioned was ... wait for it ... higher food costs. Milk prices (cheese) indeed went up, but at the butt-end of Q3, not during the whole period. Could this be an excuse?

While weak domestic consumer spending hampered sales, international sales did just the opposite, increasing 8.3% for the quarter. Have Domino's done enough in the Q3 period to goose more sales from customers, if that was even possible? I'll say that Papa John's International (NYSE: PZZA) advertised like crazy in my area this past quarter -- on television, newspapers and in other areas. I saw next to nothing from Domino's. I wonder if the company is masking "declining sales" with "losing business to the competition?"

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