8/5/2023 0 Comments Pwr dominos pizzaThis will in turn hurt margins in the restaurant business as operators will face declining sales amid high costs because of inflation. The bear case for the sector, which largely underperforms during recessions due to tighter consumer spending, hinges on the idea that interest rate hikes will prompt job cuts, lead to a chain reaction of spending cuts, and ultimately trigger a recession that slows demand. Crumbling bear caseĭPZ's bear case is similar to the general bear thesis for the restaurant industry and broader consumer discretionary sector. Tellingly, DPZ recently earned an upgrade from BTIG, who cited its pricing power, noting that it would enter the new year with the highest level of menu pricing in more than a decade and could take even more price on the $7.99 carry-out offering. DPZ has strong pricing power and can protect its margins by passing these costs on to consumers. Now is a great time to start buying or add to your existing position if you were lucky to snap up shares closer to the 52 week lows.Ĭoncerns over input costs and labor shortages, while relevant at the moment, are transitory and manageable. Internationally, same store sales have grown for 109 straight quarters, according to recent analysis by LRT Capital, which is bullish on the stock.Īgainst this backdrop, as well as the generally weak market in 2022, DPZ has declined 33% YTD. While this beat the consensus expectation for a drop of 5.0%, it was unusual given DPZ has maintained steady and healthy growth for same store sales in the U.S. same store sales (one of the most important metrics for a restaurant operator) declined 2.9%. These challenges impacted short-term performance through the year, with Q2 being particularly affected as DPZ missed profit expectations and U.S. Like most players in the restaurant business, DPZ ran into a number of industrywide headwinds in 2022 such as higher input costs, supply chain shocks, and labor shortages. This in part explains why the stock's 773% return over the last 10 years has outperformed the S&P 500 by as much as 4x.ĭPZ has outperformed S&P by more than 4x in last 10 yrs (Seeking Alpha) Capitalize on short-term weaknessĭPZ has gotten more attractive as an investment in recent quarters thanks to short-term weaknesses in the business that have weighed on the stock price. As a result, DPZ has, through the years, been able to build a growing and loyal base of buy-and-hold investors. These kinds of returns, especially after considering they are being generated by a stable and well-established company like DPZ, are appealing to investors. To put this in context, DPZ's latest full-year dividend payout is essentially the same as the net income it made just eight years ago. Its latest payout ratio (dividend relative to net income) was 32.89%, which comes to about $163 million on net income of $510.5 million. Growing and loyal base of buy-and-hold investorsĭPZ's dividend payout per share has steadily grown from $1.0 in 2014 to $3.76 in 2021. Thanks to this strong financial and operational performance that has been successfully sustained over time, DPZ has been able to reward its shareholders with generous dividends through the years. The data has been retrieved from Seeking Alpha. I've made this comparison in the tables below, which look at how measures such as DPZ's revenue, net income, levered free cash flow and EPS have trended in the periods reviewed. This exceptional growth is clearly evident if you compare its business performance in the 2018 to 2022 time frame with the prior four year period starting 2014. has supercharged its growth in the past few years. The world's largest franchisor of pizza, with over 13,800 locations in 85 countries, Domino's Pizza, Inc. ( NYSE: DPZ) has a good fundamental story when you examine how its financial and operational performance has evolved in the past three to five years against the backdrop of the Covid-19 pandemic, supply chain disruptions, global geopolitical shocks such as the war in Ukraine, runaway inflation, interest rate hikes, and the prospect of a recession.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |