DPZ Investors - Our Quick Report For You.

Now trading at a price of $370.66, Domino's Pizza has moved -2.6% so far today.

Domino's Pizza returned gains of 13.0% last year, with its stock price reaching a high of $409.95 and a low of $285.84. Over the same period, the stock returned a similar cumulative performance to the S&P 500. As of April 2023, the company's 50-day average price was $389.49.

Domino's Pizza, Inc., through its subsidiaries, operates as a pizza company in the United States and internationally. Based in Ann Arbor, MI, the large-cap Consumer Discretionary company has 6,500 full time employees. Domino's Pizza has offered a 1.2% dividend yield over the last 12 months.

Exceptional Profitability Overshadowed by Excessive Leverage:

2018-02-20 2019-02-21 2020-02-20 2021-02-25 2022-03-01 2023-02-23
Revenue (MM) $2,788 $3,433 $3,619 $4,117 $4,357 $4,537
Gross Margins 31.0% 38.0% 39.0% 39.0% 39.0% 36.0%
Operating Margins 19% 17% 17% 18% 18% 16%
Net Margins 10.0% 11.0% 11.0% 12.0% 12.0% 10.0%
Net Income (MM) $278 $362 $401 $491 $510 $452
Net Interest Expense (MM) -$121 -$143 -$147 -$171 -$191 -$195
Depreciation & Amort. (MM) -$44 -$54 -$60 -$65 -$73 -$80
Earnings Per Share $5.83 $8.35 $9.56 $12.39 $13.75 $12.0
EPS Growth n/a 43.22% 14.49% 29.6% 10.98% -12.73%
Diluted Shares (MM) 48 43 42 40 37 38
Free Cash Flow (MM) $424 $506 $570 $681 $748 $521
Capital Expenditures (MM) -$83 -$112 -$73 -$89 -$94 -$46
Net Current Assets (MM) -$2,992 -$3,380 -$4,010 -$3,998 -$5,021 -$5,001
Long Term Debt (MM) $3,121 $3,496 $4,071 $4,116 $5,015 $4,967
Net Debt / EBITDA 5.51 5.61 5.69 5.0 5.77 6.0

Domino's Pizza has strong margins with a stable trend, wider gross margins than its peer group, and a strong EPS growth trend. However, the firm has a highly leveraged balance sheet. Finally, we note that Domino's Pizza has weak revenue growth and a flat capital expenditure trend, irregular cash flows, and just enough current assets to cover current liabilities.

The Market May Be Overvaluing Domino's Pizza's Earnings and Assets:

Domino's Pizza has a trailing twelve month P/E ratio of 29.5, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of $15.73, the company has a forward P/E ratio of 24.8. Domino's Pizza's PEG ratio is 3.09 on the basis of the 9.5% weighted average of the company and the broader market's EPS compound average growth rates. This suggests that the company's shares are overvalued.

Domino's Pizza Has an Analyst Consensus of Some Upside Potential:

The 26 analysts following Domino's Pizza have set target prices ranging from $320.0 to $483.0 per share, for an average of $417.46 with a buy rating. As of April 2023, the company is trading -6.7% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Domino's Pizza has an average amount of shares sold short because 6.2% of the company's shares are sold short. Institutions own 96.6% of the company's shares, and the insider ownership rate stands at 0.55%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 11% stake in the company is worth $1,462,528,908.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.