3 Reasons to Buy Domino's Pizza Stock Like There's No Tomorrow
People can debate their favorite toppings or preferred style of crust, but it’s hard to find someone who doesn’t love pizza. For more than 60 years, Domino’s Pizza (NYSE: DPZ) has translated that universal constant into a globally recognized brand and wildly successful franchise business.
Since the company’s initial public offering in July 2004 at $14 per share, the stock has returned 7,058%, including an ongoing 12-year streak of consecutive annual dividend increases. Indeed, there’s a lot to like about this restaurant industry pioneer which looks to be on sale, trading 20% below its 52-week high at the time of writing.
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Here are three reasons Domino’s Pizza stock could be a tasty buy right now.
After emerging from a period of record growth during the pandemic’s height, Domino’s is navigating a more challenging macroeconomic environment. Rising costs, combined with budget-conscious consumers’ resistance to higher pricing, have pressured company sales and earnings, particularly between 2022 and 2023.
In response, Domino’s announced its “Hungry for MORE” strategy last year. The acronym “MORE” stands for Most Delicious Food, Operational Excellence, Renowned Value, and Enhanced by Best-in-Class Franchisees and Team Members. The strategy encompasses a series of organizational steps to jump-start growth and accelerate profitability. The recent results suggest the plan is working.
In the fiscal third quarter (ended Sept. 8), Domino’s U.S. store sales climbed by 3% year over year, reversing the 0.6% decline in Q3 2023. Improving margins have translated to a 16% increase in earnings per share (EPS) through the first nine months of the year, compared to the period in 2023.
Management is highlighting how its Hungry for MORE efforts, including a return of aggressive promotions and menu innovations, have allowed Domino’s to capture market share within the quick-service restaurant (QSR) pizza category this year.
The trends are a good sign that profitable growth can continue. Domino’s expects annual global retail sales to increase by approximately 6% in both 2024 and 2025, while targeting a stronger longer-term performance of 7% or more. The company also sees an upside in margins, allowing income from operations to outpace the top line over time.
|
Metric |
2024 estimate |
2025 estimate |
Longer-term (2026-2028) estimate |
|
Annual global retail sales growth |
6% |
6% |
7% |
|
Annual income from operations growth |
8% |
8% |
8% |
Data source: Domino’s Pizza.
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