Should you add Domino's Pizza Group (LON:DOM) to your watchlist now?

To the uninitiated, it may seem like a good idea (and an exciting prospect) to buy companies that have a good story to tell investors, even if they don't currently have a track record of revenue or profits. Unfortunately, these high-risk investments have little chance of ever turning a profit, and many investors pay the price to learn their lesson. Unprofitable companies are constantly racing against time to achieve financial sustainability, so investors in these companies may be taking on more risk than necessary.

So if this high-risk, high-reward mentality doesn't suit you, you might be interested in some profitable growing companies like these: Domino's Pizza Group (LON:DOM). We're not saying that the company offers the best investment opportunity, but profitability is a key component of a successful business.

Check out our latest analysis for Domino's Pizza Group

How fast is Domino's Pizza Group growing?

If a company can keep growing its earnings per share (EPS) long enough, the stock price should eventually follow suit. That's why EPS growth is an attractive feature for any company. Domino's Pizza Group was able to grow its EPS at 17% per year over three years, which is a pretty good growth rate, assuming the company can maintain this growth rate.

One way to double-check a company's growth is to look at the changes in its revenue and earnings before interest and tax (EBIT) margins. While Domino's Pizza Group's EBIT margins have been little changed over the past year, the company should be pleased to report that its revenue grew 13% to UK£680m in the period, which is a real positive.

The chart below shows how the company's earnings and revenue have progressed over time: Click on the chart to see the exact numbers.

LSE:DOM Earnings and Revenue History 30 May 2024

In investing, as in life, the future is more important than the past. free Domino's Pizza Group Interactive Visualization forecast Profit?

Are Domino's Pizza Group insiders aligned with all shareholders?

It's good practice to check a company's remuneration policy to ensure the CEO and management are not prioritizing their own interests over shareholders with excessive pay packages.For companies with market capitalizations between £787m and £2.5b, such as Domino's Pizza Group, the median CEO remuneration is around £1.8m.

Domino's Pizza Group has offered its CEO total compensation worth £1.2 million over the year to December 2023. This is below the average for companies of its size and seems quite reasonable. While CEO compensation levels should not be the biggest driver of a company's valuation, modest compensation is a positive as it shows the board has shareholders' interests in mind. More generally, it can also be a sign of good governance.

Should you add Domino's Pizza Group to your watchlist?

One of the key features of Domino's Pizza Group is that it is growing earnings. Not only that, but the CEO's compensation is quite reasonable, which should give investors more confidence in the board. So, given its merits, this stock is worth further research, if not adding to your watchlist. Before we move on, here's what you need to know: 5 Warning Signs for Domino's Pizza Group (Number 2 is less convincing to us!) Here's what we discovered.

Picking stocks with neither earnings growth nor insider buying can pay off, but for investors who care about these key metrics, here is a handpicked list of UK companies with promising growth potential and insider confidence.

Please note that the insider transactions discussed in this article are reportable transactions in the relevant jurisdictions.

Valuation is complicated, but we can help make it simple.

To find out if Domino's Pizza Group is overvalued or undervalued, check out our comprehensive analysis. Fair value estimates, risks and warnings, dividends, insider trading, financial strength.

View your free analysis

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

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