Image Source: Domino’s Pizza is up nearly 14% on a year-to-date basis during 2023, but the company’s shares haven’t done much over the past 52 weeks.
By Brian Nelson, CFA
On July 12, Domino’s Pizza (DPZ) announced that it had inked a new deal with Uber (UBER) that would allow customers in the U.S. to order Domino’s food through the Uber Eats and Postmates apps with delivery provided by drivers of Domino’s and its franchisees. Domino’s Pizza continues to be a standout leader in digital initiatives across the restaurant arena, and the firm noted that the new agreement will open up Domino’s and its franchisees “to a new segment of customers and what (it) believes will be a meaningful amount of incremental delivery orders.” The high end of our fair value estimate of Domino’s stands at $450 per share.
This logical DPZ-UBER agreement is an incremental positive for roughly 70% of Domino’s stores across the globe, and while we’re not making any changes to our valuation model on the news, it’s clear the market likes the announcement. Shares of Domino’s have advanced nearly 14% so far in 2023, and it’s good to see a move that will likely reignite same-store sale expansion, which came in at 3.6% in the U.S. during Domino’s first quarter of 2023. Domino’s continues to be one of our favorite restaurant equities due in part to its heavily franchised business model, impressive digital initiatives, and long-term growth prospects. We’re sticking with Domino’s in the Best Ideas Newsletter portfolio.
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Tickerized for DPZ, UBER, DASH and various other restaurants.
Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, BITO, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, and RSP. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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