Image Source: PixabayDomino’s Pizza Inc. (DPZ) was founded in 1960 and has grown to become the largest pizza company in the world by sales. The company currently has a market capitalization of $15.5 billion. Despite flat earnings in Q3 2024, we remain confident in the long-term prospects of this high-quality business.With more than 21,000 stores across over 90 countries, Domino’s generates nearly half of its sales in the United States. About 99% of these stores are independently owned by franchisees, from which the parent company collects a 5.5% royalty on top-line sales.The company’s recent results were decent, but not exceptional. On Oct. 10, 2024, Domino’s posted its fiscal Q3 results for the period ending Sept. 8, 2024. US same-store sales increased by 3%, while international same-store sales grew by 0.8%. Earnings per share rose slightly from $4.18 to $4.19, a 0.2% increase, largely impacted by higher tax provisions.Domino’s also affirmed its optimistic five-year outlook, aiming to open over 1,100 new stores annually and grow global retail sales and operating income by 7% and 8% per year, respectively, through 2028. Domino’s management has identified the opportunity to add over 10,000 new stores in its top 15 markets. With around 11,000 stores currently operating in these countries, the growth potential remains substantial — even without taking into account the other approximately 75 markets where the company is present.We expect EPS to compound at 11% annually going forward, from a mix of operating income growth – possibly in excess of management expectations – and continued aggressive share repurchases.Domino’s growth is supported by its competitive advantages. As one of the largest pizza delivery chains globally, Domino’s benefits from extensive market reach, economies of scale, and efficient operations, ensuring consistent service and cost efficiency. Its strong brand fosters customer loyalty, maintaining steady demand even during economic downturns.This resilience was proven during the COVID-19 pandemic. Domino’s adjusted EPS grew 25.5% from 2019 to 2020. The company also saw adjusted EPS growth in fiscal 2021.
Domino’s stock recently offered investors a 1.3% dividend yield. This is about in line with the S&P 500’s dividend yield. We expect 11% annualized EPS growth ahead to go along with the average dividend yield. Additionally, the company has increased its dividend for 11 consecutive years. Domino’s makes a compelling selection for investors looking for years of strong dividend growth ahead.More By This Author:UNH And The Dow: What’s Driving Recent Weakness…And What Lies AheadEQT: A Natural Gas-Weighted Stock Ideal For A More Disciplined Energy IndustryPfizer: Guidance Reaffirmed, Nice Yield. What’s Not To Like?
