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Pizza Delivery Giant Surges to 52-Week High on Sales Boost, Expansion Efforts
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Certain things just never go out of style.
And one of those things is America’s favorite food – pizza.
Pizza company Domino’s Pizza (DPZ - Free Report) has been in the delivery game for a long time; founded in 1960, Domino’s established itself as one of the leading pizza chains through its company-owned and franchised stores. DPZ stock has exploded more than 6,000% since its 2004 IPO, making it one of the best market performers over the last 20 years.
So far, the general stock market has faltered in 2024 following last year’s historic rally. The S&P 500 has been met with selling pressure near its former highs (a logical point of resistance). Better-than-expected economic data is pushing treasury yields higher and most stocks lower.
Yesterday’s release of the December retail sales report showed that consumer spending remains resilient. Retail sales grew 0.6% last month, above the 0.4% forecast. The surprise figure showed that the U.S. consumer ended 2023 in a better position than many had feared.
A strong consumer bodes well for a company like Domino’s; DPZ stock has bucked the trend this year, hitting a series of 52-week highs on an upbeat sales outlook and renewed expansion efforts.
A Bigger Slice of the Pie
Domino’s remains focused on innovation and customer expansion. CEO Russell Weiner stated recently that a “barbell customer strategy” will enable the company to retain value-oriented eaters, but also help Domino’s to acquire higher-income customers by partnering with Uber Eats. In the United States, the company is the market leader in the delivery segment.
Image Source: Zacks Investment Research
Domino’s is upping the ante in terms of its promotions. The free “emergency pizza” promotion starts with customers putting in an initial order, who can then claim their pizza within a month by downloading the Rewards app. Weiner stated that customers who came back to claim their free pizza often added more items, particularly if they opted for delivery.
The pizza giant is benefitting from strong comps growth driven by an innovative digital ordering system and higher global retail sales. Domino’s generates a good chunk of its revenues from outside the U.S. and remains committed to accelerating its presence in high-growth international markets. During last year’s fiscal third quarter, global retail sales rose 5.3% year-over-year. Domino’s international business added 190 net new stores during the quarter. An emphasis on expansion, digitalization, and sales-building initiatives should help the company retain its upward trajectory.
The Zacks Rundown
Domino’s is part of the Zacks Retail - Restaurants industry group, which currently ranks in the top 43% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months.
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Note the favorable characteristics for this group below:
Image Source: Zacks Investment Research
Domino’s Pizza has spun together an impressive earnings history, surpassing earnings estimates in each of the last four quarters. Back in October, the company reported third-quarter earnings of $4.18/share, a 27.05% surprise over the $3.29/share consensus estimate. Domino’s has delivered a trailing four-quarter average earnings surprise of 12.88% and is set to deliver Q4 results next month.
Image Source: StockCharts
The stock looks primed to break out of a multi-year consolidation pattern, touching a new 52-week high during today’s trading session. DPZ stock has soared nearly 50% since bottoming out last year. Renewed volume has attracted investor attention as buying pressure accumulates in this leading stock.
Bottom Line
This pizza giant has doubled down on shareholder value initiatives. Domino’s has increased its dividend every year after introducing regular dividends in 2013. During last year’s fiscal third quarter, the company also returned about $90 million to shareholders via stock repurchases.
As investors, our job isn’t to predict an unknowable future. Our job is to position our portfolios in the direction that stocks are most likely to go.
No one can consistently predict tops and bottoms of every move, but we can take advantage of major trends and allow our investing capital to compound over time. That’s what it’s all about, and DPZ has certainly allowed us to compound capital at an incredible rate. The company’s expansion efforts point to more strength ahead.
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Pizza Delivery Giant Surges to 52-Week High on Sales Boost, Expansion Efforts
Certain things just never go out of style.
And one of those things is America’s favorite food – pizza.
Pizza company Domino’s Pizza (DPZ - Free Report) has been in the delivery game for a long time; founded in 1960, Domino’s established itself as one of the leading pizza chains through its company-owned and franchised stores. DPZ stock has exploded more than 6,000% since its 2004 IPO, making it one of the best market performers over the last 20 years.
So far, the general stock market has faltered in 2024 following last year’s historic rally. The S&P 500 has been met with selling pressure near its former highs (a logical point of resistance). Better-than-expected economic data is pushing treasury yields higher and most stocks lower.
Yesterday’s release of the December retail sales report showed that consumer spending remains resilient. Retail sales grew 0.6% last month, above the 0.4% forecast. The surprise figure showed that the U.S. consumer ended 2023 in a better position than many had feared.
A strong consumer bodes well for a company like Domino’s; DPZ stock has bucked the trend this year, hitting a series of 52-week highs on an upbeat sales outlook and renewed expansion efforts.
A Bigger Slice of the Pie
Domino’s remains focused on innovation and customer expansion. CEO Russell Weiner stated recently that a “barbell customer strategy” will enable the company to retain value-oriented eaters, but also help Domino’s to acquire higher-income customers by partnering with Uber Eats. In the United States, the company is the market leader in the delivery segment.
Image Source: Zacks Investment Research
Domino’s is upping the ante in terms of its promotions. The free “emergency pizza” promotion starts with customers putting in an initial order, who can then claim their pizza within a month by downloading the Rewards app. Weiner stated that customers who came back to claim their free pizza often added more items, particularly if they opted for delivery.
The pizza giant is benefitting from strong comps growth driven by an innovative digital ordering system and higher global retail sales. Domino’s generates a good chunk of its revenues from outside the U.S. and remains committed to accelerating its presence in high-growth international markets. During last year’s fiscal third quarter, global retail sales rose 5.3% year-over-year. Domino’s international business added 190 net new stores during the quarter. An emphasis on expansion, digitalization, and sales-building initiatives should help the company retain its upward trajectory.
The Zacks Rundown
Domino’s is part of the Zacks Retail - Restaurants industry group, which currently ranks in the top 43% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months.
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Note the favorable characteristics for this group below:
Image Source: Zacks Investment Research
Domino’s Pizza has spun together an impressive earnings history, surpassing earnings estimates in each of the last four quarters. Back in October, the company reported third-quarter earnings of $4.18/share, a 27.05% surprise over the $3.29/share consensus estimate. Domino’s has delivered a trailing four-quarter average earnings surprise of 12.88% and is set to deliver Q4 results next month.
Image Source: StockCharts
The stock looks primed to break out of a multi-year consolidation pattern, touching a new 52-week high during today’s trading session. DPZ stock has soared nearly 50% since bottoming out last year. Renewed volume has attracted investor attention as buying pressure accumulates in this leading stock.
Bottom Line
This pizza giant has doubled down on shareholder value initiatives. Domino’s has increased its dividend every year after introducing regular dividends in 2013. During last year’s fiscal third quarter, the company also returned about $90 million to shareholders via stock repurchases.
As investors, our job isn’t to predict an unknowable future. Our job is to position our portfolios in the direction that stocks are most likely to go.
No one can consistently predict tops and bottoms of every move, but we can take advantage of major trends and allow our investing capital to compound over time. That’s what it’s all about, and DPZ has certainly allowed us to compound capital at an incredible rate. The company’s expansion efforts point to more strength ahead.