Is Dominos Pizza a buy?

It’s time to breakdown one of the most well-known pizza players! Here is the breakdown on $DPZ, otherwise known as Dominos Pizza.

Current Price: $385.88

52/Wk High: $435.58

52/Wk Low: $270.08

Market Cap: $15.3 billion

Dividend: $3.12 / 0.81% Yield

Read below for the breakdown!

Domino’s Pizza is one of the most well-known pizza restaurant chains in the United States with 85 markets around the world and 13,800 locations.

Throughout the COVID-19 pandemic ordering food has been a cornerstone in the public transition to the stay at home life. Given this, Dominos has capitalized on the opportunity to grow.

Taking a look at Domino’s most recent earnings numbers the company reported mixed results. Domino’s missed Q3 EPS expectations of $2.79, reporting an EPS of $2.49 (up 21.5% y/y).

On the flip side global retail sales grew 14.8% and US same-store sales grew 17.5% throughout the third quarter. Furthermore, international same-store sales grew by 6.2% and Dominos opened 83 new global net stores.

Taking a look at Domino’s record, the company has now reported international same-store sales growth for the 107th consecutive quarter in a row and US same-store sales growth for the 38th consecutive quarter in a row.

In total, Domino’s reported Q3 revenues of $146.9 million, representing a 17.9% increase in revenues throughout the third quarter. Management noted that the quarter’s growth was motivated by US retail sales.

On a final earnings note, the third quarter’s net income increased by 14.8% to $12.8 million. Management noted that this increase was mainly due to increased operating income and US sales.

Reviewing the numbers it is clear that Dominos is a clear and consistent winner simply based on earnings. Given the consistent growth, it’s hard to see the numbers slowing down anytime soon.

Taking a look at the balance sheet the numbers could use improvement.

Total Debt: $4.106 billion

Total Liabilities: $4.832 billion

Total Assets: $1.621 billion

Cash & Short Term Inv: $450 million

When it comes to the valuation $DPZ is pricy but not too far gone.

Price to Earnings: 33.10x

Price to Sales: 3.90x

Price to Cash Flow: 30.63x

On the flip side, management has been quite effective.

Return on Assets: 33.71%

Return on Invested Capital: 50.09%

Taking in the numbers the analysts remain very bullish with a mean price target of $443.38/share, representing a 14.90% gain.

It is also important to note that Domino’s high price target is $500.00/share, representing a 29.57% gain, while the low price target is $380.00/share, representing a -1.52% loss.

The big money is also very involved with 91.05% of Dominos being owned by institutions. Top holders include The Vanguard Group, Capital World Investors, and BlackRock Institutional Trust.

On a technical basis, Dominos seems to be presenting an opportunity. According to the six-month charts, the MACD is slowly moving to the upside within a tight range around -2.00.

The six-month charts are also indicating an RSI of 47.29 and CCI of -10.33, both of which are on the low end. It is also important to note that $DPZ currently trades roughly 50 points off its highs.

In short, Dominos seems to be a solid long term buy at its current price point given the pullback the stock has suffered over the last few months and long term history of consistent growth.

EAT - SLEEP - PROFIT

Disclaimer: This is not direct financial advice, simply an opinion based on independent research.