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Domino's (DPZ) Gains 11% in 3 Months: Will Growth Continue?

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In an intensely competitive restaurant space, Domino's Pizza, Inc. (DPZ - Free Report) has done well and emerged as an attractive investment option. This is quite evident from the stock’s price performance in the past three months. Shares of the company have gained 11.4% compared with the industry’s 10% growth.

We believe there is still momentum left in this Zacks Rank #2 (Buy) stock, which is quite evident from its long-term impressive earnings growth rate of 14.7% and a VGM Score of B. Let’s delve deeper.

Key Catalysts

In a bid to boost sales, Domino’s is investing heavily in technology-driven initiatives like digital ordering. Recently, the company announced that it is starting driverless pizza delivery services in Houston, TX. To this end, the company has partnered with Nuro — a robotic company for the delivery services. The driverless pizza delivery services can be only be availed by select residents of Texas. It has been underway in the Houston metro area since March 2019 and will further expand Nuro's autonomous delivery operations.

Moreover, in 2017, Domino's in conjunction with Ford Motor Co., initiated a research on consumers’ responses to pizza delivery using self-driving vehicles. Notably, digital leadership is helping the company expand its brand in the domestic market as well as overseas.

Since Domino’s generates a chunk of its revenues from outside the United States, it remains committed toward accelerating presence in high-growth international markets to boost business. Meanwhile, the company’s international growth continues to be strong and diversified across markets driven by exceptional unit level economics. Notably, the first quarter of 2019 marked the 101st consecutive quarter of positive same-store sales at its international business. Domino’s inaugurated 829 and 1,058 net new stores in international markets during 2017 and 2018, respectively. In first-quarter 2019, the company opened 200 net new stores.

Many international franchisees continue generating robust returns. Apart from the established markets such as Canada, Japan, Italy, the U.K., Ireland, Switzerland and South Korea, the emerging markets like Brazil, China, Indonesia and Turkey have been witnessing solid growth. Australia, Russia, New Zealand and Saudi Arabia are also gaining momentum.

Additionally, the company completed the conversion of Pizza Sprint stores to Domino's stores in South Africa and Germany. This should further drive its revenues. Meanwhile, India remains a market of immense growth potential. Currently, Domino’s India operations are one of the fastest growing operations in its global system.

Other Key Picks

A few other top-ranked stocks that warrant a look in the same space include Chipotle Mexican Grill, Inc. (CMG - Free Report) , Noodles & Company (NDLS - Free Report) and Denny's Corporation (DENN - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chipotle Mexican Grill and Noodles & Company has an impressive long-term earnings growth rate of 19.2% and 8.8%, respectively.

Shares of Denny's have gained 18.9% in the past three months.

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