It has been beneath its earlier excessive for longer than buyers would have appreciated.
On Dec. 31, 2021, shares of Domino’s Pizza (DPZ 2.08%) closed at an all-time excessive of $564.33 per share. And buyers had been undoubtedly thrilled. In any case, anybody who invested $10,000 simply 5 years earlier had seen the worth climb to over $35,000 throughout this time.
Sadly, Domino’s Pizza inventory hasn’t carried out as nicely for buyers since that all-time excessive on the ultimate day of 2021. Since then, shares have dropped by about 20% — not one thing one needs to see after patiently holding for about 3.5 years.
Picture supply: Getty Pictures.
Domino’s has solely grown at a modest tempo lately, which is definitely contributing to its underwhelming inventory efficiency. Income in 2024 was solely 8% larger from income in 2021. And its earnings per share (EPS) of $16.69 in 2024 was solely up 23% from EPS of $13.54 in 2021.
Corporations that solely publish single-digit progress numbers typically fail to outperform the S&P 500 over the long run. And that is what’s occurred with Domino’s Pizza inventory, contemplating the S&P 500 is up greater than 30% since Domino’s hit its all-time excessive.
Can Domino’s inventory do higher from right here?
Domino’s Pizza wants higher progress for its inventory to carry out higher. And being the biggest pizza chain on the planet already, this could possibly be difficult. Administration solely expects single-digit top-line progress for the foreseeable future. However with share repurchases, it may push its EPS progress to about 10% yearly.
This nonetheless may not be sufficient progress on the underside line to outperform the S&P 500 over the long run. That mentioned, it could possibly be sufficient progress to permit the inventory to rise in coming years, albeit at a modest tempo.
Due to this fact, whereas it will not be a market beater, buyers might be inspired that Domino’s Pizza may attain a brand new all-time excessive throughout the subsequent few years.
Jon Quast has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Domino’s Pizza. The Motley Idiot has a disclosure coverage.
