Topic: Growth Stocks

DOMINO’S PIZZA $69.96 – New York symbol DPZ

DOMINO’S PIZZA $69.96 (New York symbol DPZ; TSINetwork Rating: Average) (734-930-3030; www.dominos.com; Shares outstanding: 55.7 million; Market cap: $3.9 billion; Dividend yield: 1.1%) is the world’s largest chain of pizza stores that offer takeout and delivery. It operates 10,500 outlets in the U.S. and over 70 other countries. Franchisees run most of these stores.

The company’s earnings per share rose 18.6% in the quarter ended September 8, 2013, to $0.51 from $0.43 a year earlier. The latest figure fell just short of the consensus estimate of $0.52. Sales gained 6.9%, to $404.1 million from $378.1 million. That beat the consensus estimate of $403.0 million. Same-store sales rose 5.0% internationally and 5.4% 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 38.5% of its market cap. However, it continues to steadily pay down its debt.

Domino’s began paying dividends in March 2013 at a rate of $0.20 a quarter. The shares yield 1.1%.

The stock has jumped over 65% for us in the past year. It now trades at 25.4 times the company’s forecast 2014 earnings of $2.75 a share. However, Domino’s long-term prospects remain strong.

Domino’s Pizza is still a buy.

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