Forget Domino’s, buy these 3 pizza dough instead
The world’s largest pizza chain, Domino’s Pizza, Inc. (DPZ), headquartered at Ann Arbor, Michigan, has approximately 18,300 stores in more than 90 markets. Its shares have gained 27.4% in the past nine months to close yesterday’s trading session at $ 480.27. However, the stock is currently trading 12.5% ââbelow its 52-week high of $ 548.72, which it reached on July 22, 2021. In addition, the stock has lost 10.7% of its price over the past three months.
DPZ revenue grew 3.1% year-on-year to $ 997.99 million for its fiscal third quarter, ended September 12, 2021, and net profit was $ 120.40 million dollars, up 21.5% year-on-year. However, his same-store sales fell for the first time in over a decade. The stock is also trading at an expensive valuation. In terms of advance EV / S, DPZ’s 4.99x is 248.2% higher than the industry average 1.43x. Additionally, the stock’s 3.97x forward P / S is 226.9% above the industry average 1.22x. So, it might be wise to wait for a better point of entry into the stock.
Nonetheless, the rapid pace of vaccinations and rising consumer discretionary spending are expected to boost demand for pizza places. According to a Business thread research report, the global pizza market is expected to reach $ 233 billion in 2023. Therefore, instead of betting on DPZ, we think it might be wise to bet on better positioned pizza stocks Yum! Trademarks, Inc. (YUM), Papa John’s International, Inc. (PZZA) and Rave Restaurant Group, Inc. (RAVE). They are well positioned to take advantage of favorable industry winds.
YUM! Trademarks, Inc. (YUM)
Based in Louisville, Ky. YUM, along with its subsidiaries, develops, operates and franchises quick service restaurants around the world. It operates through four segments: the KFC division; the Pizza Hut division; the Taco Bell division; and the Habit Burger Grill division.
On September 7, 2021, YUM announced the acquisition of Dragontail Systems Limited, an innovative provider of technology solutions for the food industry. Company CEO David Gibbs said, âThe continued acceleration of our digital and technology strategy is a key driver of growth for our business and our people, including how we leverage our globally by investing in technology initiatives that improve the customer and employee experience. , strengthen the economy of the restaurant unit and offer a competitive advantage to our franchisees.
YUM’s revenue grew 34% year-over-year to $ 1.60 billion in the second quarter ended June 30, 2021, while its same-store sales growth was 23%. The company’s net income and adjusted EPS were up 89% and 41%, respectively, year-over-year to $ 391 million and $ 1.16.
For its 2021 fiscal year, analysts expect YUM’s EPS and revenue to be $ 4.53 billion and $ 6.57 billion, respectively, representing an increase of 25.1 percent and 16.2 percent. ‘year after year. Additionally, it has beaten Street’s EPS estimates in each of the past four quarters. Over the past year, the stock gained 28.4% of its price to close yesterday’s trading session at $ 125.79.
YUM’s strong fundamentals are reflected in its POWR odds. It has an overall rating of B, which is equivalent to a purchase in our proprietary rating system. POWR scores are calculated by considering 118 separate factors, each factor being weighted to an optimal degree.
It has an A rating for quality and a B rating for momentum. In category A Restaurants industry, it is ranked No. 18 out of 44 stocks. To see additional POWR ratings of Growth, Value, Sentiment and Stability for YUM, Click here.
Papa John’s International, Inc. (PZZA)
PZZA operates and franchises pizza and takeout delivery restaurants through four segments: National Company-Owned Restaurants; North American Commissioners; Franchise in North America; and international operations. The Company operates 5,400 Papa John’s restaurants, including 588 company-owned restaurants and 4,812 franchised restaurants in 48 countries. The PZZA is based in Louisville, Ky.
On September 29, 2021, PZZA signed an agreement with Sun Holdings to open 100 new stores in Texas by 2029. Company CEO Rob Lynch said, âOur major global competitors have two to three times as many restaurants. than we have in the world. So, we think that over the next five years, we will be working to double the number of restaurants we have. “
PZZA’s revenue increased 11.8% year-on-year to $ 515 million in its fiscal second quarter, ended June 27, 2021. The company’s non-GAAP adjusted net income increased by 107, 1% year-on-year to $ 32.5 million, and its Adjusted EPS increased 93.7% year-on-year to $ 0.93.
The company’s EPS and revenue is expected to grow 122.9% and 12.1%, respectively, year-over-year to $ 3.12 billion and $ 2.03 billion in its 2021 fiscal year. Additionally, it has beaten Street’s EPS estimates in three of the past four quarters. Over the past year, the stock has gained 52.3% going to close yesterday’s session at $ 119.68.
PZZA’s POWR ratings reflect this promising outlook. The stock has an overall rating of B, which is equivalent to Buy in our proprietary rating system. It has a B rating for momentum, feeling, and quality.
In the same industry, it is ranked # 3. To view additional POWR ratings for PZZA stability, growth and value, Click here.
Rave Restaurant Group, Inc. (RAVE)
RAVE operates in the fast growing, casual pizza space and franchises pizza buffets, delivery / take out and express restaurants under the Pizza Inn brand nationally and internationally. The Dallas, Texas-based company operates through three segments: Pizza Inn Franchising; Pie Five franchise; and company-owned restaurants.
On August 25, 2021, RAVE announced an international development agreement with ZIS General Trading Company to open three new stores in Palestine. RAVE President and CEO Brandon Solano said, âRAVE is delighted that Mr. Ziad and Mr. Ibrahim are helping to expand Pizza Inn’s presence in Palestine. These new store openings will help Pizza Inn to continue to expand its global presence.
For the quarter ended June 27, 2021, RAVE’s adjusted EBITDA increased 233.3% year-over-year to $ 2 million. The company’s net profit was $ 1.50 million. against a loss of $ 4.20 million the previous year. In addition, its adjusted EPS stood at $ 0.09, down from a loss of $ 0.28 during the period last year. Over the past year, RAVE stock has gained 83.9% in price to close yesterday’s trading session at $ 1.24.
It’s no surprise that RAVE has an overall rating of B, which equates to Buy in our POWR rating system. It has an A rating for quality and a B rating for value, momentum and feeling.
RAVE is ranked # 5 in the restaurant industry. Click here to see additional POWR ratings for RAVE (Growth and Stability).
YUM shares were trading at $ 124.76 per share on Thursday morning, down $ 1.03 (-0.82%). Year-to-date, YUM has gained 16.39%, compared to a 23.59% increase in the benchmark S&P 500 over the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in economics in college and has a passion for writing, which led to her career as a research analyst. Following…