Store Count: 2014 - 2021ĭPZ International and US Store Count (New Constructs, LLC)Ĭontinued growth in the global Quick Service Restaurant market will support Domino's global retail sales growth. Per Figure 3, Domino's grew its store count from 11,629 in 2014 to 18,848 in 2021.įigure 3: International and U.S. For potential franchisees, the company offers a streamlined operating model, national marketing campaigns, and a cash-on-cash return of investment in three years or less.Ĭlearly the opportunity is attractive to franchisees globally because the international market has been the main driver of store growth. This franchise model is beneficial to investors because it enables the company to efficiently manage its capital while having the flexibility to pursue strong growth opportunities. Dominos is more of a supply chain operator and consumer marketing firm than it is a restaurant chain. The company generates revenue from franchise royalties and its supply chain operations in the United States. Retail Sales: 2021ĭPZ Sales by Geography (New Constructs, LLC) Franchise Model Drives Store Count Growthĭomino's is thought of as a restaurant chain, but the company owns just 2% of its stores. For example, Domino's risk from rising tension between China and the international community is limited as just 5% of its international stores are in China.įigure 2: International and U.S. Global reach exposes the company to geopolitical risks but a wide geographic dispersal limits exposure to individual countries outside the United States. Per Figure 2, Domino's international segment accounted for 51% of its global retail sales in 2021. and international retail sales have each grown by 10% compounded annually over the past 10 years. For more details about the upside embedded in Domino's stock price, see the scenarios analyzed using our reverse discounted cash flow model in the valuation section.įigure 1: Stock Price and Economic Book Value per Share: 2013 - CurrentĭPZ PEBV Ratio Since 2013 (New Constructs, LLC) Proven International Forceĭomino's has more than 18,800 locations in 90 different markets around the world. See Figure 1.Ī PEBV ratio of 0.9 means the stock is priced for profits to immediately fall and permanently stay 10% below 2021 levels, which as we'll show below, is highly unlikely. Then, as traders unwound their pandemic trades, the stock has tumbled 30% year-to-date and now trades below its price-to-economic book value (PEBV) ratio (0.9) for just the second time since 2013. Like many companies that grew sales during the pandemic, Domino's Pizza's stock price soared ~50% above pre-pandemic levels. valuation implies the company's profits will permanently fall 10% from current levels.ability to overcome current labor shortages over the long term.efficiencies from its integrated delivery system that third parties cannot replicate.position as the world's largest pizza chain. Domino's ( NYSE: DPZ ) is this week's Long Idea.ĭomino's stock presents quality risk/reward given the company's: The company is mischaracterized as a restaurant chain when it is really more of a supply chain operator and consumer marketing firm. This company saw large market share gains throughout the pandemic and is positioned for years of more profit growth, but its stock has fallen 30% year to date and is trading at pre-pandemic levels.
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