What Is Domino's Pizza, Inc.'s (NYSE:DPZ) Share Price Doing?

Domino's Pizza, Inc. (NYSE:DPZ) saw a significant share price rise of 24% in the past couple of months on the NYSE. The company is inching closer to its yearly highs following the recent share price climb. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today we will analyse the most recent data on Domino's Pizza’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Domino's Pizza

What Is Domino's Pizza Worth?

According to our valuation model, Domino's Pizza seems to be fairly priced at around 5.10% above our intrinsic value, which means if you buy Domino's Pizza today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $491.02, there’s only an insignificant downside when the price falls to its real value. In addition to this, Domino's Pizza has a low beta, which suggests its share price is less volatile than the wider market.

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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 28% 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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on DPZ, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook 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.

So while earnings quality is important, it's equally important to consider the risks facing Domino's Pizza at this point in time. While conducting our analysis, we found that Domino's Pizza has 2 warning signs and it would be unwise to ignore these.

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.