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Domino's Pizza Inc DPZ

Morningstar Rating
$502.16 +0.03 (< 0.01%)
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Company Report

Domino's Earnings: Strong Transaction Growth Encouraging as New Strategy Bears Fruit; Shares Pricey

We’re encouraged by wide-moat Domino’s first-quarter results, with the operator enjoying strong same-store sales growth of 5.6% in its home market, materially topping our 1% estimate. It had looked to us like the firm’s first quarter would be its weakest of the year given the challenging industry backdrop, so it was great to see 3.8% growth in comparable transactions, by our estimates and excluding the firm’s Uber Eats partnership (1.4% of sales, 67% incremental). Management left its full-year guidance largely unchanged despite that outperformance, with a cocktail of factors, from normalizing digital services fees to increasing investments and higher food cost inflation likely to drive margin normalization over the balance of the year. Nevertheless, the traction Domino’s has enjoyed from its loyalty program refresh and its partnership with Uber Eats should provide durable sales growth tailwinds. After digesting results, we plan to raise our $400 fair value estimate by a mid-single-digit percentage, though shares still look pricey at current levels.

Price vs Fair Value

DPZ is trading at a 25% premium.
Price
$502.16
Fair Value
$874.00
Uncertainty
Medium
1-Star Price
$347.23
5-Star Price
$842.50
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Compelling cash-on-cash returns and competitive restaurant margins should render Domino's ambitious global net unit growth targets attainable.

Bears

An increasingly promotional industry environment could drive an uptick in competitive pressure in Domino's value segment of the restaurant market, pressuring comparable store sales.

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News

Trading Information

Previous Close Price
$502.13
Day Range
$500.75505.56
52-Week Range
$285.84542.75
Bid/Ask
$501.20 / $502.99
Market Cap
$17.52 Bil
Volume/Avg
368,274 / 591,906

Key Statistics

Price/Earnings (Normalized)
32.67
Price/Sales
3.90
Dividend Yield (Trailing)
1.00%
Dividend Yield (Forward)
1.18%
Total Yield
2.53%

Company Profile

Domino’s is a restaurant operator and franchiser with nearly 20,600 global stores across more than 90 international markets at the end of 2023. The firm generates revenue through the sales of pizza, wings, salads, sandwiches, and desserts at company-owned stores, royalty and marketing contributions from franchise-operated stores, and its network of 25 domestic (and five Canadian) dough manufacturing and supply chain facilities, which centralize purchasing, preparation, and last-mile delivery for the firm's US and Canadian restaurants. With roughly $18.3 billion in 2023 system sales, Domino’s is the largest player in the global pizza market, ahead of Pizza Hut, Little Caesars, and Papa John’s.
Sector
Consumer Cyclical
Industry
Restaurants
Stock Style Box
Mid Growth
Total Number of Employees
11,200

Competitors

Valuation

Metric
DPZ
YUM
MCD
Price/Earnings (Normalized)
32.6726.1821.48
Price/Book Value
Price/Sales
3.905.597.31
Price/Cash Flow
27.6322.6819.18
Price/Earnings
DPZ
YUM
MCD

Financial Strength

Metric
DPZ
YUM
MCD
Quick Ratio
0.961.130.63
Current Ratio
1.761.490.83
Interest Coverage
4.354.668.46
Quick Ratio
DPZ
YUM
MCD

Profitability

Metric
DPZ
YUM
MCD
Return on Assets (Normalized)
34.76%24.93%16.58%
Return on Equity (Normalized)
Return on Invested Capital (Normalized)
65.12%56.97%21.45%
Return on Assets
DPZ
YUM
MCD
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