Further, carryout may be a strong point for Domino's, as consumers look to save on delivery fees and tips. Such smaller and lower-cost items are more novel and could help the pizza chains fare better in a year where consumers chase value. Rival Pizza John's ( NASDAQ: PZZA) has really stepped up its game on the menu innovation front with Papadias (its Calzone offering). New product items - like Oven-Baked Dips, Baked Apple Dip, and other sides - introduced in recent years could reignite Americans' hunger for pizza again. Further, the company has the opportunity to improve upon its "value" stance as it looks to retain margins and its standards for quality. Though pizza may have lost its luster on a relative basis, Domino's remains a juggernaut in the pizza market. Everything from fried chicken to burgers can now be brought to one's doorstep within the hour. Indeed, DoorDash ( NYSE: DASH) and food-delivery companies have made it such that pizza is no longer the only option for those looking to get a hot meal brought to them. With store traffic soft relative to its restaurant rivals, it seems like Domino's could risk losing share to its fast-food peers. From inflation to a recession, the headwinds could continue to weigh on DPZ and various restaurant brands that aren't known for their "value" menus.Ĭommodity costs (think pizza toppings), inflation, and wage pressures (tied to labor shortages) are transitory issues that weighed on the latest results. the $2.97 consensus estimate), investors seem to be bracing for a recession just as the firm looks to overcome inflation pressures.
Dominos stock target full#
Domino's Feeling the Full Force of Headwindsįresh off a mixed bag of earnings (EPS came in shy of estimates at $2.79 vs. Though Domino's stellar margins could take a bit of a hit as consumers tighten the purse strings, the international growth story and cutting-edge ordering tech still make the firm a quality company to own once the market's ready to move on.Īt today's valuations, far too much emphasis is placed on headwinds, those in the rear-view (inflation) and up ahead (a recession). With a 0.69 beta, Domino's stock is likely to act less choppy than the broader averages. With pandemic gains mostly surrendered, Domino's seems like a very compelling value and growth option heading into a recession year.Īt writing, the stock trades at 27.3x trailing earnings and 2.7x sales - not exactly a bargain, but a very reasonable multiple to pay for such a high-quality growth firm that's done a stellar job of executing over the years.
The company was built to thrive in an era of widespread lockdowns, with its top-notch delivery capabilities, a focus on serving quality at fairly reasonable prices, and a recipe revamp that's found a spot with consumers. Domino's Pizza Stock: The Epitome of Growth at a Reasonable Priceĭomino's stock seemed unstoppable in the pandemic's earlier days.
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