Is Domino's Pizza (NYSE:DPZ) worth putting on your watchlist?


Many investors, especially inexperienced investors, typically buy stocks in companies with good stories, even if the company is losing money. In some cases, these stories can cloud investors' minds and lead them to invest based on emotion rather than based on the fundamentals of a good company. Loss-making companies are not yet profitable, so the inflow of external capital may eventually dry up.

So if this idea of ​​high risk and high reward doesn't suit you, you might be more interested in profitable growth companies such as: domino pizza (NYSE:DPZ). This doesn't necessarily indicate whether it's undervalued or not, but the profitability of the business is enough to justify some valuation, especially if it's growing.

Check out our latest analysis for Domino's Pizza.

How fast is Domino's Pizza increasing its earnings per share?

If you believe that markets are even vaguely efficient, you would expect a company's stock price to follow its earnings per share (EPS) results in the long run. Therefore, it makes sense for experienced investors to pay close attention to a company's EPS when doing investment research. Over the past three years, Domino's Pizza's EPS has increased by 7.4% annually. While such a growth rate isn't anything to write home about, it does show that the business is growing.

To reassess the quality of a company's growth, it's often useful to look at its earnings before interest and tax (EBIT) margin, as well as its revenue growth. This approach makes Domino's Pizza look pretty good overall. Revenues are flat, but EBIT margins improved from 17% to 19% last year. That's funny.

You can see the company's revenue and profit growth trends in the chart below. Click on the graph to see exact numbers.

Earnings and revenue historyEarnings and revenue history

Earnings and revenue history

Although we live in the present moment, there is little doubt that the future is paramount in the investment decision process. So why not check out this interactive graph showing his future EPS predictions for Domino's Pizza?

Are Domino's Pizza insiders aligned with all shareholders?

We wouldn't expect insiders to own a large percentage of a US$18b company like Domino's Pizza. But it's good to see that, thanks to their investment in the company, there is still an incentive to align their actions with shareholders. Owning US$94m worth of shares in the company is no laughing matter, and insiders will be determined to deliver the best outcome for shareholders. Certainly enough to signal to shareholders that management is very focused on long-term growth.

It's good to see insiders invested in the company, but are the compensation levels reasonable? A quick analysis of CEO compensation shows that this is the case. For companies like Domino's Pizza with a market capitalization of over USD 8 billion, the median CEO compensation is approximately USD 14 million.

Domino's Pizza has offered its CEO total compensation worth US$10 million for the year ending December 2023. This seems pretty reasonable, especially considering it's below the median for similarly sized companies. While CEO pay levels shouldn't be the biggest factor in determining how a company is viewed, modest pay is a positive, as it suggests the board has shareholder interests in mind. More generally, it can also be a sign of good governance.

Should you add Domino's Pizza to your watchlist?

One of Domino's Pizza's key encouraging characteristics is that its profits are growing. EPS growth may be an eye-catching headline for Domino's Pizza, but it's not the only thing that brings joy to shareholders. Given the significant level of insider ownership and reasonable CEO compensation, a rational mind might conclude that this is a stock worth watching.Note that it still shows Domino's Pizza 2 warning signs in investment analysis you should know…

While picking stocks with no growth in earnings and no insider buying can still yield results, there are some promising growth potential and insider confidence options for investors who value these important metrics. Below is a selected list of US companies with .

Please note that the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Have feedback on this article? Curious about its content? contact Please contact us directly. Alternatively, email our editorial team at Simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.



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