It has been beneath its earlier excessive for longer than traders would have appreciated.
On Dec. 31, 2021, shares of Domino’s Pizza (DPZ 2.08%) closed at an all-time excessive of $564.33 per share. And traders have been undoubtedly thrilled. In any case, anybody who invested $10,000 simply 5 years earlier had seen the worth climb to over $35,000 throughout this time.
Sadly, Domino’s Pizza inventory hasn’t carried out as effectively for traders since that all-time excessive on the ultimate day of 2021. Since then, shares have dropped by about 20% — not one thing one needs to see after patiently holding for about 3.5 years.
Picture supply: Getty Photos.
Domino’s has solely grown at a modest tempo lately, which is actually contributing to its underwhelming inventory efficiency. Income in 2024 was solely 8% larger from income in 2021. And its earnings per share (EPS) of $16.69 in 2024 was solely up 23% from EPS of $13.54 in 2021.
Corporations that solely put up single-digit development numbers usually fail to outperform the S&P 500 over the long run. And that is what’s occurred with Domino’s Pizza inventory, contemplating the S&P 500 is up greater than 30% since Domino’s hit its all-time excessive.
Can Domino’s inventory do higher from right here?
Domino’s Pizza wants higher development for its inventory to carry out higher. And being the most important pizza chain on the planet already, this might be difficult. Administration solely expects single-digit top-line development for the foreseeable future. However with share repurchases, it may push its EPS development to about 10% yearly.
This nonetheless won’t be sufficient development on the underside line to outperform the S&P 500 over the long run. That mentioned, it might be sufficient development to permit the inventory to rise in coming years, albeit at a modest tempo.
Due to this fact, whereas it will not be a market beater, traders may be inspired that Domino’s Pizza may attain a brand new all-time excessive throughout the subsequent few years.
Jon Quast has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Domino’s Pizza. The Motley Idiot has a disclosure coverage.
