Topic: Growth Stocks

DOMINO’S PIZZA $61.50 – New York symbol DPZ

DOMINO’S PIZZA $61.50 (New York symbol DPZ; TSINetwork Rating: Average) (734-930-3030; www.dominos.com; Shares outstanding: 55.7 million; Market cap: $3.5 billion; Dividend yield: 1.3%) is the world’s largest chain of pizza stores that offer takeout and delivery. It operates 10,440 outlets in the U.S. and over 70 other countries. Franchisees run most of these stores.

The company’s earnings per share rose 21.3% in the quarter ended June 16, 2013, to $0.57 from $0.47 a year earlier. The latest figure beat the consensus estimate of $0.56. Sales gained 10.0%, to $414.0 million from $376.1 million. That also exceeded the consensus estimate of $405.1 million. Same-store sales rose 5.8% internationally and 6.7% in the U.S.

Domino’s continues to boost its sales by aggressively promoting its new pizza recipes. It’s also profiting by moving into ordering online and through software applications, or apps, on smartphones. In addition, it still has lots of growth potential overseas.

The company’s long-term debt is still high, at $1.5 billion, or 43% of its market cap. However, it continues to steadily pay down its debt, and it has no major loans coming due until 2019.

Domino’s began paying dividends in March 2013 at a rate of $0.20 per quarter. The shares yield 1.3%.

The stock has jumped over 70% for us in the past year. It now trades at 26.2 times the company’s forecast 2013 earnings of $2.35 a share. However, Domino’s long-term prospects remain strong.

Domino’s Pizza is still a buy.

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