At US$421, Is It Time To Put Domino's Pizza, Inc. (NYSE:DPZ) On Your Watch List?

Domino's Pizza, Inc. (NYSE:DPZ) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$528 at one point, and dropping to the lows of US$403. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Domino's Pizza's current trading price of US$421 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Domino's Pizza’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Domino's Pizza

What's The Opportunity In Domino's Pizza?

According to our valuation model, Domino's Pizza seems to be fairly priced at around 16% below our intrinsic value, which means if you buy Domino's Pizza today, you’d be paying a fair price for it. And if you believe the company’s true value is $500.95, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, Domino's Pizza’s share price may be more stable over time (relative to the market), as indicated by its low beta.

Can we expect growth from Domino's Pizza?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 21% over the next couple of years, the future seems bright for Domino's Pizza. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? DPZ’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on DPZ, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 2 warning signs for Domino's Pizza you should be aware of.

If you are no longer interested in Domino's Pizza, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.