What are The Good and Bad Things About Domino’s Pizza Inc. (NYSE:DPZ)?


Domino’s Pizza Inc. (NYSE:DPZ) has become the most-beloved pizzeria from the most-hated one. As a result, the company has attracted many investors. Domino’s Pizza Inc. (NYSE:DPZ) realized the mistakes that it made in the past and attempted to correct them. The company has made the right decision, as seen by increased sales by 7% to $1.8 billion this year. The revenue for the third quarter has increased by 10.5% from last year. Let’s analyze different aspects of Domino’s Pizza Inc. (NYSE:DPZ).

Domino’s Pizza Inc. (NYSE:DPZ) is the no.1 pizza delivery service in the U.S. The company has 23.6% share in market. Domino’s Pizza Inc. (NYSE:DPZ) is a global enterprise with over 11,000 stores operating in over 70 countries throughout the world. All of these operations are franchised. Last year, the company generated revenue of $8 billion. In the recent quarter sales report, the company generated higher than expected comparable store sales which grew by 7.7% YoY. Pizza Hut brand of Yum! Brands (NYSE:YUM) is just behind Domino’s Pizza Inc. (NYSE:DPZ). It has about 13,400 stores and generates a revenue of about $5.7 billion.

According to a report, about three-quarters of the consumers in U.S. eat pizza two times in one month at least. Yet, NPD Group says that industry will expectedly grow only about 2% in the next year. Last year, growth was 2% and the year before, it was 3.7%. Analysts expect Domino’s Pizza Inc. (NYSE:DPZ) to grow at a slower rate as well. Even though the company is ahead of the industry and is expecting a revenue growth of 9% for the current fiscal, analysts have lower expectations for the next year; they forecast a growth in revenues of 5.5%. Profits on earnings per share jumped over 18% this year and will increase to 17% in the next year.

Fast-casual chains are increasing and expanding. As a result, the traditional pizza shops are facing more competition. The fast-casual restaurants only hold about 14% of the total limited-service dining segment in the market. But, they are growing at a fast pace and will soon be ahead of full-service and quick-serve segments. Analysts believe that pizza shops are just an extension of the fast-casual concept.

A report suggests that the made-to-order pizza will be a big thing. It already uses fresh ingredients that go in conformity with the health concepts that are found in leaders of casual dining. There are several others that are now following the concept of fast-casual. These include Papa Murphy’s, Pie Five, Blaze Pizza and PizzaRev. These competitors could easily gain advantage from the shortfalls of Domino’s Pizza Inc. (NYSE:DPZ).

Domino’s Pizza Inc. (NYSE:DPZ) is still a very good investment even though it is facing many challenges. The fast-casual chains may take away some of its market share only because these are all the hype for the time being. According to market data, traditional pizza chains like Domino’s Pizza Inc. (NYSE:DPZ) will perform well in the industry in the long run.