Domino’s Pizza (DPZ) is back in the spotlight and it’s easy to see why. In February 2025, the company announced a 15% increase in its quarterly dividend, bumping it up to $1.74 per share, a clear sign of confidence in its ability to keep growing and rewarding shareholders. This came after a strong 2024, where Domino’s reported a 5.1% jump in total revenue and a 12.5% rise in net income.
The fast-food industry has been thriving despite global challenges, with trends like digital ordering, healthier menus, and sustainability driving growth. Domino’s has tapped into these trends well, achieving 5.9% global retail sales growth last year and adding 775 new stores worldwide.
While competitors like McDonald’s (MCD) and Yum! Brands (YUM) also raised their dividends in 2024, Domino’s stands out with its efficient operations and its “Hungry for MORE” strategy, which focuses on boosting order counts and improving the customer experience through digital tools.
With this strong foundation, Domino’s recent dividend hike raises an important question: Is this “undervalued” stock a smart buy for investors? Let’s take a closer look.
How Domino’s Financials Stack Up
Domino’s Pizza (DPZ) keeps things simple but effective, focusing on selling pizzas through its franchise stores and online platforms. With innovations like digital ordering and real-time tracking, it has cemented its place as the world’s largest pizza company, serving millions across 90-plus countries.
So far in 2025, the stock is up nearly 15%, reflecting growing investor confidence.
Domino’s delivered solid results in 2024 despite tough economic conditions. Revenues grew by 5.1% to $4.71 billion, with income from operations increasing by 7.3%.
Net income rose by 12.5% to $584.2 million, while diluted EPS climbed 13.8% to $16.69. The fourth quarter alone saw revenue growth of 2.9%, alongside a 9.2% increase in diluted EPS to $4.89. These gains were bolstered by share repurchases totaling $327 million during the year.
From a valuation perspective, DPZ trades at a forward P/E of 26.9x, higher than the consumer discretionary sector average of 16.35x, signaling a premium valuation relative to peers. Its PEG ratio near 3x is also much higher than the industry average.
While its market capitalization of $16.43 billion underscores its scale, these metrics raise questions about whether the stock is fully valued or offers upside potential amidst its strong financial momentum.
Growth Drivers Powering Domino’s Future
Domino’s Pizza keeps proving it has solid fundamentals for long-term growth. CEO Russell Weiner highlighted the success of the company’s “Hungry for MORE” strategy, which helped grow order counts. In 2024, Domino’s hit an impressive milestone: 31 straight years of international same-store sales growth. It gained market share in the U.S. by focusing on value, a strategy that appeals to budget-conscious customers and reinforces its spot as the top pizza company in the world.
The company’s share buybacks also show its confidence in the future. In 2024, Domino’s spent $327 million repurchasing shares, which reduced the number of shares available and boosted earnings per share. With $814.3 million still authorized for future buybacks, this move reflects financial strength and a commitment to rewarding investors.
On top of that, Domino’s recently increased its quarterly dividend by 15% to $1.74 per share, marking 12 straight years of dividend growth. The annualized dividend is now $6.96, yielding 1.48%. While slightly below the sector average of 1.89%, this increase shows strong cash flow and confidence in maintaining payouts.
These moves highlight Domino’s ability to invest in growth while rewarding shareholders, making it an interesting option despite its premium valuation.
Analyst Insights on Domino’s Trajectory
After Domino’s 15% dividend hike, analysts have shared mixed but mostly positive views on its outlook. Analysts give it a “Moderate Buy” consensus rating, with an average price target of $490.37, suggesting 1.6% upside from the current price.
UBS analyst Dennis Geiger reaffirmed a “Buy" rating with a $540 target, citing Domino’s resilience and potential for growth through operational improvements and upcoming sales initiatives. Similarly, Benchmark’s Todd Brooks kept his “Buy” rating with a $520 target, praising the company’s profitability and consistent dividend growth.
However, some concerns linger. Wedbush adjusted its Q1 2025 EPS estimate slightly downward from $4.13 to $4.02 due to challenges in U.S. same-store sales but maintained an “Outperform” rating with a $500 target, showing confidence in Domino’s long-term potential.
Conclusion
Domino’s Pizza has proven its resilience and growth potential through solid financial performance, strategic share repurchases, a 15% dividend hike, and consistent market share gains. While its valuation may seem steep compared to peers, the company’s fundamentals and optimistic analyst outlook suggest there’s still room for long-term upside. Domino’s might be worth a closer look for investors hungry for a blend of stability, growth, and shareholder returns.
On the date of publication, Ebube Jones 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.
