Is Domino's Pizza (DPZ) Still Attractive After Recent Share Price Weakness?

• For investors wondering if Domino's Pizza at around US$400 a share still offers good value, or if the easy gains are already behind it, this article walks through what the current price may be implying.
• The stock closed at US$400.28, with a 1.2% decline over the last week, an 8.7% decline over the last month, a 5.9% decline year to date, and a 20.1% return over 3 years and a 12.1% return over 5 years.
• Recent coverage around Domino's Pizza has focused on its role as one of the established names in quick service restaurants and how it continues to attract attention from both long term holders and newer investors. This steady interest helps frame the recent price moves as investors weigh how current expectations line up with what they want from the stock.
• On Simply Wall St's 6 point valuation check, Domino's Pizza currently scores 2 out of 6. In this article we will look at what different valuation methods say about that score, and then finish with one more way of thinking about value that can help put all these numbers in context.

Domino's Pizza scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Domino's Pizza Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a business might be worth by projecting its future cash flows and then discounting those back into today's dollars. It is essentially asking what the stream of expected cash the company could generate is worth right now.

For Domino's Pizza, the latest twelve month Free Cash Flow is about US$622.3 million. Simply Wall St uses a 2 Stage Free Cash Flow to Equity model that combines analyst estimates with its own extrapolations. For example, projected Free Cash Flow for 2028 is US$787.4 million. The ten year path includes years such as 2026 at US$695.9 million and 2035 at US$926.8 million, with each future figure discounted back to today.

Bringing all those projected and discounted cash flows together, the model arrives at an estimated intrinsic value of around US$347.11 per share. Against the recent share price of about US$400, this implies the stock is roughly 15.3% overvalued based on this DCF approach.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Domino's Pizza may be overvalued by 15.3%. Discover 871 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Domino's Pizza.

Approach 2: Domino's Pizza Price vs Earnings

For a profitable company like Domino's Pizza, the P/E ratio is a useful cross check because it directly links what you pay for each share to the earnings that business is currently generating. It is a quick way to see how much investors are willing to pay for every dollar of profit.

What counts as a reasonable P/E usually reflects two things: how fast earnings are expected to grow and how risky those earnings are perceived to be. Higher growth expectations or lower perceived risk tend to support a higher P/E, while slower growth or higher risk typically point to a lower one.

Domino's Pizza currently trades on a P/E of 22.94x. That sits above the Hospitality industry average of 21.89x, but below the peer group average of 25.49x. Simply Wall St also calculates a Fair Ratio of 20.19x, which is its proprietary view of what P/E might make sense after considering factors like earnings growth, profit margins, industry, market cap and company specific risks.

This Fair Ratio can be more informative than a simple comparison to peers or the industry because it adjusts for the company’s own profile rather than assuming a one size fits all benchmark. Set against the current 22.94x, the 20.19x Fair Ratio suggests Domino's Pizza screens as slightly expensive on this measure.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Domino's Pizza Narrative

Earlier we mentioned that there is an even better way to think about value. On Simply Wall St this is called a Narrative, where you set out your story for Domino's Pizza, link that story to a forecast for revenue, earnings, margins and a fair value, then compare that fair value to the current price. This tool is available on the Community page for millions of users and updates automatically as new news or earnings arrive. One investor might build a Domino's Pizza Narrative that looks closer to the higher US$594 analyst target because they put more weight on digital partnerships, fortressing and menu additions. Another might anchor nearer the lower US$340 target because they focus on risks like pizza category softness and slower international expansion. The platform makes it easy for you to see how those different stories translate into different fair values and potential decisions about when to buy or sell.

Do you think there's more to the story for Domino's Pizza? Head over to our Community to see what others are saying!

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.

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