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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

2 Reasons to Avoid DPZ and 1 Stock to Buy Instead

DPZ Cover Image

Domino's currently trades at $427.48 per share and has shown little upside over the past six months, posting a middling return of 4.5%. However, the stock is beating the S&P 500’s 1.2% decline during that period.

Is now the time to buy Domino's, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.

Even with the strong relative performance, we're sitting this one out for now. Here are two reasons why we avoid DPZ and a stock we'd rather own.

Why Is Domino's Not Exciting?

Founded by two brothers in Michigan, Domino’s (NYSE: DPZ) is a globally recognized pizza chain known for its creative marketing and fast delivery.

1. Long-Term Revenue Growth Disappoints

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Domino's grew its sales at a tepid 5.4% compounded annual growth rate. This fell short of our benchmark for the restaurant sector. Domino's Quarterly Revenue

2. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Domino’s revenue to rise by 5.3%, close to its 5.4% annualized growth for the past five years. This projection doesn't excite us and suggests its newer menu offerings will not lead to better top-line performance yet.

Final Judgment

Domino's isn’t a terrible business, but it isn’t one of our picks. Following its recent outperformance in a weaker market environment, the stock trades at 24.5× forward price-to-earnings (or $427.48 per share). At this valuation, there’s a lot of good news priced in - we think there are better opportunities elsewhere. We’d recommend looking at a dominant Aerospace business that has perfected its M&A strategy.

Stocks We Like More Than Domino's

With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.

Put yourself in the driver’s seat by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.

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