Domino’s Pizza’s stock price (NYSE: DPZ) traded 4% lower on Tuesday morning, after posting mixed results compared to Wall Street expectations.
Domino’s (DPZ) reported earnings per share of $1.95 and total revenue of $786 million, compared to analyst estimates of $1.75 and $800 million. Domestic comparable sales growth was 6.3% versus estimates of 6.5%, with international sales edging higher.
Yet CEO Ritch Allison said, “Our domestic business executed at high levels. And our global business, driven by strong retail sales growth, continued its strong momentum.”
Our view is that Domino’s has a PE ratio of 37, which far exceeds the restaurant group as a whole. For comparison, the Dynamic Food and Beverage Fund (PBJ) has a PE ratio around 6.
In analyzing the market cycles for DPZ, it appears that the stock is in the declining phase of its current cycle.
As such, we expect more downside risk with a target of $250 by November, and additional risk into next year.
Domino’s Pizza (DPZ) Stock Chart with Weekly Bars
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