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Domino's Pizza, Inc. (DPZ), headquartered in Ann Arbor, Michigan, operates as a pizza company. With a market cap of $14.9 billion, the company operates a network of company-owned and franchised Domino's Pizza stores located worldwide. DPZ also operates regional dough manufacturing and distribution centers.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and DPZ perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the restaurant industry. DPZ leads the global pizza market with over 20,600 stores, driven by strong brand recognition, quality, and quick service. Its vast franchising model generates consistent royalty streams, while innovation and customer satisfaction initiatives fuel growth.
However, DPZ shares slipped 21.4% from their 52-week high of $542.75, achieved on Apr. 30. Over the past three months, DPZ stock has declined 20%, underperforming the Nasdaq Composite’s ($NASX) 3.3% gains during the same time frame.
In the longer term, shares of DPZ rose 3.5% on a YTD basis and climbed 11.9% over the past 52 weeks, lagging behind NASX’s YTD gains of 20.4% and solid 36.8% returns over the last year.
While DPZ has been trading below its 200-day moving average since mid-July, it has been trading above its 50-day moving average recently.
DPZ's overall underperformance can be attributed to international market challenges, particularly in Japan and France, exacerbated by inflationary pressures on costs. Reduced store opening plans and limited operating profit gains have sparked investor concerns, fueling skepticism about future growth prospects.
On Jul. 18, DPZ shares fell more than 13% after reporting its Q2 results. DPZ reported total domestic comparable sales growth of 4.8%, weaker than the consensus of 4.92%, and warned that it would fall short of its international store growth target for the year. Its EPS of $4.03 topped Wall Street expectations of $3.70, and its revenue of $1.1 billion met Wall Street forecasts.
DPZ’s rival, Papa John's International, Inc. (PZZA), has had a rough ride. PZZA's shares plummeted 33.3% on a YTD basis and 29.1% over the past 52 weeks, trailing DPZ’s gains over the same time frame.
Wall Street analysts are moderately bullish on DPZ’s prospects. The stock has a consensus “Moderate Buy” rating from the 29 analysts covering it, and the mean price target of $495.45 suggests a potential upside of 16.2% from current price levels.
On the date of publication, Neha Panjwani 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.
