Domino’s Pizza, Inc. (NYSE:DPZ): Immense Growth Potential?

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

After Domino’s Pizza, Inc.’s (NYSE:DPZ) earnings announcement in March 2019, it seems that analyst expectations are fairly bearish, as a 11% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 19%. By 2020, we can expect Domino’s Pizza’s bottom line to reach US$401m, a jump from the current trailing-twelve-month of US$362m. Below is a brief commentary around Domino’s Pizza’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for Domino’s Pizza

Can we expect Domino’s Pizza to keep growing?

Over the next three years, it seems the consensus view of the 20 analysts covering DPZ is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of DPZ’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:DPZ Past and Future Earnings, July 3rd 2019
NYSE:DPZ Past and Future Earnings, July 3rd 2019

By 2022, DPZ’s earnings should reach US$494m, from current levels of US$362m, resulting in an annual growth rate of 10%. EPS reaches $12.81 in the final year of forecast compared to the current $8.65 EPS today. In 2022, DPZ’s profit margin will have expanded from 11% to 11%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Domino’s Pizza, I’ve compiled three important factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Domino’s Pizza worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Domino’s Pizza is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Domino’s Pizza? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.