Dominos Pizza Inc (DPZ) stock analysis

P/E below its 5-year median

Dominos Pizza's P/E of 18.1 is below its own 5-year median of 26.7.

P/E below the industry

Dominos Pizza's P/E of 18.1 is below the Groceries and Related Products median of 27.7.

EV/EBITDA below its 5-year median

Dominos Pizza's EV/EBITDA of 14.2 is below its 5-year median of 21.0.

P/S above the industry

Dominos Pizza's price-to-sales of 2.13 is above the Groceries and Related Products median of 0.51 (book value is negative, so we use sales).

Trading below fair value

The share price of $328.60 is below our fair value estimate of $413.71.

Margin of safety over 20%

The price is 20.6% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 2.9% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 11.9% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew 3.4% over the last twelve months, against a 5-year average of 4.1% a year.

Growing slower than the industry

Revenue grew 4.5% over the last twelve months; the Groceries and Related Products median is 5.2%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin improving

Gross margin was 40.0% over the last twelve months, against 39.8% a year earlier.

Return on equity

Needs positive equity and five years of results.

Return on capital over 10%

Return on invested capital was 110%, above the 10% that usually covers the cost of capital.

Return on equity against the industry

Needs positive equity.

Earnings grew over 5 years

Net income grew 4.1% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 12.0% over the last twelve months, against a 5-year average of 11.6%.

Net margin above the industry

Dominos Pizza's net margin of 12.0% is above the Groceries and Related Products median of 1.0%.

Debt level

Needs debt and equity figures.

Debt trend

Needs a balance sheet from five years ago with positive equity.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 15.6% of total debt; we look for at least 20%.

Interest well covered

Operating income covers interest expense 5.0 times.

Short-term assets don't cover short-term debts

Current assets are 0.49 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.08; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Dominos Pizza paid dividends worth 2.3% of the share price over the last twelve months.

Yield below Treasuries

The 2.3% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Dominos Pizza yields 2.3%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 41.3% of net income.

Covered by free cash flow

Dividends take 39.6% of free cash flow.