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Domino's Pizza Hits 52-Week High: What's Driving the Stock?

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Shares of Domino’s Pizza, Inc. (DPZ - Free Report) , the world leader in pizza delivery, hit a 52-week high of $152.07 during the trading session on Sep 15. The company ended the day’s trading marginally lower at $151.79. Notably, year to date, the stock has returned over 36%.

Domino’s revenues have surpassed the Zacks Consensus Estimate in six of the last seven quarters. The second quarter of 2016 (ended Jun 30), marked the 21st consecutive quarter of positive same-store-sales domestically and the 90th quarter of positive comps growth internationally. The company expects the solid comps growth trend to continue, going forward.

Domino’s investment in technology-driven initiatives is one of the key sales boosting features of the company. On Sep 15, the company launched an addition to its existing world-class digital ordering platform – placing order via Facebook Messenger, using bot technology.

Digital leadership is aiding the company in expanding its brand in the domestic and overseas markets. Nearly 50% of the company’s sales come through digital channels.
 

DOMINOS PIZZA Price and Consensus

DOMINOS PIZZA Price and Consensus | DOMINOS PIZZA Quote

Domino’s is also focused on large-scale international expansion. The company opened 215 stores internationally in the second quarter of 2016 and now operates nearly 7700 stores outside the U.S. The opening of its Washington outlet on Aug 9, marked its 13,000th store globally.

The international franchisees continue to add robust returns to Domino’s results. Reducing ownership of restaurants and focusing on re-franchising minimizes the company’s capital requirements and facilitates earnings per share growth along with ROE expansion. As a result, the company has increased its dividend by 25%, 24% and 23% in 2014, 2015 and 2016, respectively, after initiating regular dividends in 2013.

However, Domino’s large international presence makes it vulnerable to currency risks. Higher cost requirements and a prevailing soft consumer spending environment for the restaurant sector in the U.S. also pose risks to margins.

Zacks Rank & Other Stocks to Consider

Domino’s Pizza currently has a Zacks Rank #3 (Hold). Some better-ranked companies in this sector include Del Taco Restaurant, Inc. , Denny’s Corporation (DENN - Free Report) and Wingstop, Inc. (WING - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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