Topic: Growth Stocks

DOMINO’S PIZZA $39.60 – New York symbol DPZ

DOMINO’S PIZZA $39.60 (New York symbol DPZ; TSINetwork Rating: Average) (734-930-3030; www.dominos.com; Shares outstanding: 57.8 million; Market cap: $2.3 billion; No dividends paid) is the world’s largest chain of pizza stores that offer takeout and delivery. The company operates 9,742 outlets in the U.S. and over 70 in other countries. Franchisees run most of these stores.

In the three months ended January 1, 2012, Domino’s earnings per share rose 33.3%, to $0.52 from $0.39. The company paid more for food ingredients, but that was offset by lower costs for labour, rent and interest.

Sales rose 4.4%, to $501.7 million from $480.0 million. U.S. same-store sales jumped 6.8%. International same-store sales rose 4.7%.

Demand was strong for Domino’s stuffed cheesy bread and its new line of “artisan” pizzas, which sell for $7.99 and come in three varieties: Spinach & Feta, the Italian Sausage & Pepper Trio and Tuscan Salami & Roasted Veggie.

Domino’s long-term debt is still very high, at $1.5 billion, or 65.2% of its market cap. However, the company continues to steadily pay down its debt, and it has no major loans coming due until 2014.

The shares have jumped 126.7% for us over the past year. They now trade at 20.8 times the company’s forecast 2012 earnings of $1.90 a share. However, Domino’s long-term prospects remain strong.

Domino’s Pizza is still a buy.

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