The firm maintained its $90 price target and said it lowered the quick-service pizza delivery company's rating because of a valuation call.
"We contend above-peer comp growth both in the U.S. and overseas, reinvigorated unit growth in the U.S. (helped potentially by a new unit prototype), a more benign food cost environment, and incremental share buybacks will provide support EPS growth of at about 20% in the next two years," said Miller Tabak analyst Stephen Anderson. "However, in light of the 30% rally from the late summer low, we now think DPZ's current share price reflects these positives."
Separately, TheStreet Ratings team rates DOMINO'S PIZZA INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate DOMINO'S PIZZA INC (DPZ) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 10.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 30.95% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DPZ should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- DOMINO'S PIZZA INC has improved earnings per share by 18.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DOMINO'S PIZZA INC increased its bottom line by earning $2.47 versus $1.90 in the prior year. This year, the market expects an improvement in earnings ($2.92 versus $2.47).
- Net operating cash flow has significantly increased by 53.95% to $58.10 million when compared to the same quarter last year. In addition, DOMINO'S PIZZA INC has also vastly surpassed the industry average cash flow growth rate of -74.78%.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Hotels, Restaurants & Leisure industry average. The net income increased by 16.3% when compared to the same quarter one year prior, going from $30.63 million to $35.62 million.
- You can view the full analysis from the report here: DPZ Ratings Report