June 20, 2024
Top 10 Stock Domino's Pizza Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Domino's Pizza – Top 10 Stock in S&P 500 Consumer Discretionary Index
Domino's Pizza is listed as a top 10 stock on June 20, 2024 in the market index S&P US Luxury because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is growing above average and professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 66 (high 66% performer), Obermatt assesses an overall buy recommendation for Domino's Pizza on June 20, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Restaurants |
| Index | S&P US Luxury, S&P 500 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Domino's Pizza Buy
| 360 METRICS | June 20, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 48 |
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| GROWTH | ||||||||
| GROWTH | 79 |
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| SAFETY | ||||||||
| SAFETY | 40 |
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| SENTIMENT | ||||||||
| SENTIMENT | 70 |
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| 360° VIEW | ||||||||
| 360° VIEW | 66 |
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ANALYSIS: With an Obermatt 360° View of 66 (better than 66% compared with alternatives), overall professional sentiment and financial characteristics for the stock Domino's Pizza are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Domino's Pizza. The consolidated Growth Rank has a good rank of 79, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 79% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 70, which means that professional investors are more optimistic about the stock than for 70% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 48, which means that the share price of Domino's Pizza is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 52% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 40, which means that the company has a financing structure that is riskier than those of 60% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 66, Domino's Pizza is better positioned than 66% of all alternative stock investment opportunities based on the Obermatt Method. Only half of the consolidated Obermatt Ranks exhibit excellent performance, so one needs to take a close look. Growth is above-average (Growth Rank of 79), and professional market sentiment is positive (Sentiment Rank of 70), but value and safety are below average. The Safety Rank is the least significant of the four consolidated ranks, because it only reflects financing practices. In the case of high growth, aggressive financing is a good thing. So the question is: How to assess below-average value against above-average growth and sentiment? Growth may be the strongest driver of the investment rationale in this case, which is reflected in institutional investors' opinions. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much do you sacrifice value for growth? You can use the following rule of thumb: If you take 100 minus the growth rank, you arrive at a possibly minimum level for the value rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the growth rank is above 60. Sometimes market sentiment just extrapolates the past, but sometimes it reflects reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Domino's Pizza positive
ANALYSIS: With an Obermatt Sentiment Rank of 70 (better than 70% compared with alternatives), overall professional sentiment and engagement for the stock Domino's Pizza is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for Domino's Pizza. Analyst Opinions are at a rank of 59 (better than 59% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. Analyst Opinions Change is also positive with a rank of 50, which means that stock research experts are changing their opinions for the better and recommending investing in the company. They are getting more optimistic about stock investments in Domino's Pizza. The Professional Investors rank is 73, which means that currently, professional investors hold more stock in this company than in 73% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 62 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 62% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 70 (more positive than 70% compared with investment alternatives), Domino's Pizza has a reputation among professional investors that is above-average compared with that of its competitors. Since all market sentiment indicators are positive, the professional community highly recommends investment in the company. Does this mean Domino's Pizza stocks are a safe investment? Far from it. Even professionals make mistakes. Especially in stock investing, there is a tendency to follow the leaders. Since trees don't grow to the heavens, such positive sentiment may also be interpreted as a danger sign. A lot of optimism can often be a sign of troubles to come, albeit unforeseen by most. ...read more
Value Strategy: Domino's Pizza Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 48 (worse than 52% compared with alternatives), Domino's Pizza shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Domino's Pizza. Expected dividend yields are higher than for 63% of comparable companies (a Dividend Yield rank of 63), making the stock attractive. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 84, which means that the stock price is lower compared with invested capital than for 84% of comparable investments. But in respect to sales and profits, the picture is reversed. Price-to-Sales is 13 which means that the stock price compared with what market professionals expect for future profits is higher than for 87% of comparable companies, indicating a low value concerning Domino's Pizza's sales levels. The Price-to-Profit ratio (also referred to as price-earnings (P/E) ratio) is also unfavorable for Domino's Pizza with a rank of 20. This means that the stock price, compared with what market professionals expect for future profits, is higher than for 80% of comparable companies, indicating a low value concerning Domino's Pizza's profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 48, is a hold recommendation based on Domino's Pizza's stock price compared with the company's operational size and dividend yields. The company seems confident that it can generate a reasonable return on invested capital, because it pays an above-average dividend while profits are below what you would expect for a company with this stock price. If you agree with this practice and believe that profits will return to higher levels, as the current dividend policy suggests, Domino's Pizza may be an attractive investment. If this is not the case, you may want to be careful with this stock as it is also expensive compared with its expected revenue levels. ...read more
Growth Strategy: Domino's Pizza Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 79 (better than 79% compared with alternatives) for 2024, Domino's Pizza shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all four indicators above average for Domino's Pizza. Sales Growth has a value of 67, which means that, currently, professionals expect the company to grow more than 67% of its competitors. The same is valid for Profit Growth with a value of 55 and for Capital Growth with 61. In addition, Stock Returns had an above-average rank value of 94, which means they have been higher than 94% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 79, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, Domino's Pizza exhibits above-average growth momentum. This could be due to a uniquely strong market position, proprietary technology, or an extensive corporate acquisition strategy. Growth investors will find this an attractive investment opportunity, unless they expect that the current phase is transitory and will deteriorate in the future. The current performance could also be a temporary recovery from a very low point, such as a turn-around situation. In the case of a turn-around, the current performance may or may not be followed by a continuing positive development. ...read more
Safety Strategy: Domino's Pizza Debt Financing Safety below-average
| SAFETY METRICS | June 20, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 1 |
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| REFINANCING | ||||||||
| REFINANCING | 78 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 65 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 40 |
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ANALYSIS: With an Obermatt Safety Rank of 40 (better than 40% compared with alternatives), the company Domino's Pizza has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Domino's Pizza is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for Domino's Pizza. Refinancing is at 78, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 78% of its competitors. Liquidity is also good at 65, meaning the company generates more profit to service its debt than 65% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 1, which means the company has an above-average debt-to-equity ratio. It has more debt than 99% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 40 (worse than 60% compared with alternatives), Domino's Pizza has a financing structure that is riskier than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Domino's Pizza could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: Domino's Pizza Above-Average Financial Performance
| COMBINED PERFORMANCE | June 20, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 48 |
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| GROWTH | ||||||||
| GROWTH | 79 |
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| SAFETY | ||||||||
| SAFETY | 65 |
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| COMBINED | ||||||||
| COMBINED | 57 |
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ANALYSIS: With an Obermatt Combined Rank of 57 (better than 57% compared with investment alternatives), Domino's Pizza (Restaurants, USA) shares have above-average financial characteristics compared with similar stocks. Shares of Domino's Pizza are low in value (priced high) with a consolidated Value Rank of 48 (worse than 52% of alternatives), and are riskily financed (Safety Rank of 40, which means above-average debt burdens) but show above-average growth (Growth Rank of 79). ...read more
RECOMMENDATION: A Combined Rank of 57, is a buy recommendation based on Domino's Pizza's financial characteristics. As the company Domino's Pizza shows low value with an Obermatt Value Rank of 48 (52% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 79% of comparable companies (Obermatt Growth Rank is 79). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 40 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Domino's Pizza, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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