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Domino's Pizza, Inc. (DPZ) is a leading player in the Quick-Service Restaurant (QSR) industry with a market cap of $14.4 billion. Based in Ann Arbor, Michigan, the company operates globally through its U.S. stores, international franchises, and supply chain segments, offering a wide range of pizzas and other menu items under the Domino's brand.
Shares of the pizza chain company have lagged behind the broader market over the past 52 weeks. DPZ has gained 6.9% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 24.3%. In 2024, shares of DPZ are up marginally compared to SPX's 17.2% gain on a YTD basis.
Zooming in further, DPZ is also underperforming the Advisorshares Restaurant ETF's (EATZ) 24.3% gain over the past 52 weeks and an 11.3% increase on a YTD basis.
Domino's Pizza has underperformed due to slower-than-expected growth in international markets, particularly in Japan and France, along with inflationary pressures on commodity and labor costs. Moreover, despite beating Q2 earnings results expectations, the stock dropped 13.6% on Jul. 18 due to weaker-than-expected same-store sales growth and a reduction in its global store opening plans from 1,100 to 925 for the year. Additionally, the limited improvement in operating profits and a high valuation contributed to investor skepticism about the company's future growth potential.
For the current fiscal year, ending in December, analysts expect DPZ's EPS to grow 10.7 year over year to $16.23. The company's earnings surprise history is promising. It beat the consensus estimates in each of the last four quarters.
Among the 29 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 16 “Strong Buy” ratings, two “Moderate Buys,” 10 “Holds,” and one “Strong Sell.”
This configuration is more bullish than three months ago, with 13 “Strong Buy” ratings on the stock.
On Aug. 26, Sara Senatore from Bank of America Securities maintained a “Buy” rating on Domino's Pizza and adjusted the target price to $577.
The mean price target of $499.07 represents a premium of 20.9% to DPZ's current levels. The Street-high price target of $600 implies a modest potential upside of 45.3% from the current price levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
