Editor's note: In this edition of "360 Degrees," RealMoney commentators take a look at Domino's Pizza. Shares of the pizza-delivery chain rose steadily from the company's IPO in 2004 through March of this year, but have since dropped about 20%. Has the stock gone stale, or can we expect it to heat back up?
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Pizza Guy, by Frank X. Curzio
This is an excerpt from a column that was originally published on RealMoney
on July 11 at 8:32 a.m. EDT
Domino's (DPZ Quote - Cramer on DPZ - Stock Picks), which began trading on the
New York Stock Exchange in July 2004, is the largest pizza delivery company in the U.S. It operates through a network of 8,079 stores in 50 countries and all 50 states.
Domino's has many advantages over chief rival
Papa John's (PZZA Quote - Cramer on PZZA - Stock Picks), including brand recognition with top marketing affiliates such as
Coca-Cola(KO Quote - Cramer on KO - Stock Picks) and Nascar. Domino's also has a strong international presence, which can be compared with those of
Starbucks(SBUX Quote - Cramer on SBUX - Stock Picks),
McDonald's(MCD Quote - Cramer on MCD - Stock Picks) and
Yum! Brands(YUM Quote - Cramer on YUM - Stock Picks).
Because Domino's is not an eat-in restaurant, it operates more efficiently than competitors. It essentially provides the same product mix while using less square footage and fewer employees. Domino's and Papa John's are both expected to grow at 11%, but Domino's trades at just 13 times next year's earnings, compared with 21 times for Papa John's. Given Domino's competitive advantages, this valuation gap will be remedied over time.
RealMoney Staff
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