Stock (Symbol) |
Domino’s Pizza (DPZ) |
Stock Price |
$190 |
Sector |
| Food & Necessities |
Data is as of |
| May 4, 2017 |
Expected to Report |
| Jul 19 |
Company Description |
 Domino’s Pizza, Inc. is a pizza restaurant chain company. As of January 1, 2017, the Company operated in over 13,800 locations in over 85 markets around the world. The Company operates through three segments: domestic stores, international franchise and supply chain. Its basic menu features pizza products in various sizes and crust types. Source: Thomson Financial |
Sharek’s Take |
 Domino’s (DPZ) is one of the best stocks of our time — achieving ten-bagger status in just last six years. Looking at the ten-year chart, DPZ broke out the week ending May 6, 2011. I looked back at the qtrly earnings release and see DPZ reported profit growth of 5% on May 5, but introduced chicken wings and boneless chicken to the menu the prior qtr. And in 2011 DPZ also introduced its iPhone and iPad mobile apps. Profits surged 25% in 2011, and have been off to the races ever since. Founded as a single store in 1960, Domino’s is the world’s #2 pizza chain and #1 pizza delivery chain. It generates sales and profits by charging franchisees royalties and selling them food & equipment. Half DPZ’s sales come from the US, Half internationally with the Intl store count jumping from 4835 to 8440 during 2011-2016. The company is on a blistering pace of 93 straight qtrs of same store sales growth (SSS) including 12% SSS growth in 2015 and 11% in 2016. SSS growth was 10% in the US last qtr and 4% Internationally, which to me means 7% overall and that would be below the double-digit rate of years past (this was left out of the earnings release). This stock has almost doubled in the last year — and has even surged from $190 to $215 since these charts and tables were prepared a month ago! Mobile apps are driving growth for Domino’s, and I expect more of the same moving forward. This stock is piping hot — and I want to buy in — but it’s got to cool down first. Management also buys back hundreds of millions of dollars in shares in addition to paying a dividend of 1%. DPZ is a top-tier growth stock and it’s at the top of my radar for the Growth Portfolio. |
One Year Chart |
 Superb profit growth during the past 4 qtrs. So why didn’t I buy the stock a year ago? Because it pad a P/E in the mid-30s and I felt that was too high. These qtrly profits you see here wasn’t what I saw — DPZ ended up beating estimates in each of the last 4 qtrs. Now qtrly profit growth Estimates are 24%, 21%, 22% and 12% and that to me smells like 30% growth will likely be delivered. The Est. LTG is 19%, but we have all underestimated DPZ’s growth rate. |
Fair Value |
 My Fair Value of 32x earnings is obviously too low as the stock’s blown past next year’s Fair Value in less than a month! Also, these annual profit estimates will likely continue to climb. |
Bottom Line |
 Domino’s has been one of the best stocks of our time, rising ten-fold in just six years. But if you notice on this chart, the angle has recently gotten steeper. And this doesn’t even take into account that the stock’s $215 today. DPZ is at the top of my radar for the Growth Portfolio and Aggressive Growth Portfolio, but I feel the stock and/or the stock market is due for a breather and it’s more prudent to wait forr a better buying opportunity. Also, SSS growth slowed to below 10% last qtr, and SSS growth is a key indicator for retail stocks. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
