Domino’s Pizza, Inc. (NASDAQ: DPZ) has failed to deliver for investors in 2022. As a result, the stock is down more than 33%. That’s significantly higher than the S&P 500 index, which posts a 19% yearly loss.  

The company has faced rising ingredient costs and difficulty finding drivers due to higher inflation. That has shown up in the company’s earnings reports. As a result, earnings have missed expectations in the last four quarters.  

But analyst sentiment is improving. And in this article, we’ll explain why it may be time for investors to take a bite of DPZ stock while it’s trading below its pre-pandemic price. 

Pizza Has Pricing Power 

A key reason for analyst optimism is that Domino’s will enter 2023 with its highest prices in over ten years. And analysts believe that the company has room to increase prices on its $7.99 carryout deal and its $6.99 Mix & Match deal.  

This comes when analysts believe the company’s ingredient costs are about to level off or slightly decrease. That combination will support higher margins, more substantial earnings, and a higher share price.  

Defining the True Cost of Pizza Delivery 

According to Statista, consumer spending on pizza delivery hit a new all-time high of $19.8 billion in 2021. That was its most significant year-on-year growth and was up from $14 billion in 2020 and $11 billion in 2019.  

And the United States spends $11 billion a year on pizza delivery. But, of course, that’s just pizza delivery, not total food delivery. And Domino’s has the largest market share, with 31% of the actual amount consumers spend on pizza. 

But that growth has come at a cost. Specifically, the company finds it hard to find and pay drivers in a tight labor market. However, analysts believe that the current wave of layoffs, hiring freezes, and sticky inflation will likely increase the candidate pool of willing drivers.  

And even if it doesn’t, the company says there is some evidence that inflation is causing consumers to steer away from having pizza delivered. However, the company is also reinstituting its “carryout tip” this holiday season which may have the combined effect of driving demand while helping the company navigate delivery problems.  

Is It Time to Buy DPZ Stock? 

Strictly based on value, there may be better options right now. The stock still has a P/E ratio higher than the sector average. However, if the company hits the expectations for high single-digit earnings growth in the next five years, Domino’s may grow into that valuation.  

And while you wait, Domino’s offers a tasty dividend. While the 1.23% dividend yield may not be that exciting for investors, that can be deceptive. The company pays out $4.40 per share, has a sustainable payout ratio of around 33%, and has been increasing its dividend in each of the last ten years.