efficiencies in our cost structure as we continue to drive recovery in margin. Additional help for earnings came from some margin expansion, which outpaced the negative impacts of foreign exchange rates, as they noted in their earnings call. They noted that the quarter saw the benefit of lapping Omicron in 2022 as well "as the benefit from a boost week in 2023." A "boost week" is when they offer pizzas at 50% off. The latest quarter saw EPS come in at $2.93, above the $2.50 they reported a year ago. All things being equal, that could indicate that the stock is undervalued if you are a longer-term investor.ĭPZ Earnings History and Forward Estimate (Portfolio Insight) By 2024, the company is already expected to top the 2021 EPS figures.
Going forward, we even see that earnings are once again expected to grow. At the same time, the stock price has fallen back to those pre-Covid levels despite higher earnings. 2022 only saw less than an 8% decline in EPS. However, what might be interesting to note is that there was still some permanent and sticky EPS growth during the pandemic years. Thus, why we've seen the price return to a more normalized level. With the two factors of debt becoming more expensive and the pandemic boom over, DPZ has been returning to a more normalized environment. Therefore, we could see them have to refinance a good portion of this at even higher rates.ĭPZ Debt Maturity Schedule (Domino's Pizza) The main risk here is that in a few years, rates may not come down substantially to provide cheaper debt. In this case, that's an eternity and probably a recession away. However, it is in year three that they might have a bit of a problem. They will have no problem paying this off. The debt obligations coming due in the next year and two years are minimal. The FCF, in this case, easily clears the requirements of the company for meeting its debt obligation. They are constantly buying back shares, but as of the latest data of shares outstanding against the current quarterly dividend, that should see an outflow of $42.760 million for dividends. Net interest expenses in the last quarter came down to $44.156 million from $46.823 million previously.
They provided an FCF of $95.651 million for the latest quarter. They noted in the latest quarter that debt once again trickled down to $5.01 billion due to repayment. In total, they had 20,008 restaurants at the end of March 26th, 2023, with 285 company owned.ĭPZ Total Debt Vs Earnings (Portfolio Insight) They own enough stores to get a good sample to test markets, and that is about it. 99% of DPZ's stores are owned and operated by franchisees.
Dominos stock valuation free#
Debt can often be seen as a negative for the company, but thanks to its lean business model and free cash flow generation, it shouldn't really be a problem. They still have $380.3 million in share repurchase authorization, which could make even more sense now that the share price is quite cheap.ĭoing these repurchases helped the companies' EPS grow even further and faster. The latest quarter saw the repurchase and retirement of around 100.5k shares worth around $30.1 million.
They are actually still doing these buybacks, but they've slowed down. The stock went from extremely overvalued to now being well below the fair value estimate based on the historical P/E.ĭPZ Fair Value Price Range (Portfolio Insight)Īn added benefit was the fact that they could ramp up debt while simultaneously doing significant buybacks.ĭPZ Shares Outstanding Vs. They've more recently been coming down from the pandemic benefits, and the share price has certainly shown this to be the case. There was also plenty of stimulus to keep consumers flush with cash. That isn't quite as rosy as the Morningstar valuation, but it indicates some optimism.ĭPZ was a pandemic darling as it benefited significantly from consumers being stuck at home during lockdowns.
analysts rate the stock a "Buy" with an average price target consensus of $347.46. Overall, Morningstar isn't alone, as Wall St. However, even with the reduction that was citing "soft traffic and delivery headwinds," it would indicate some substantial upside.
Dominos stock valuation update#
This was originally included in the monthly Cash Builder Opportunities portfolio fair value update piece.ĭomino's Pizza ( NYSE: DPZ) saw its fair value estimate drop since our last update, based on Morningstar's valuation.
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