Domino’s Pizza (DPZ, Financial) outperformed in the recently reported quarter. The company saw strong growth in sales as well as comp stores. Looking ahead, management believes that its best-in-class food service and technology will help it deliver better sales and profit growth. Let us take a look at some of the strategies that Domino’s is undertaking.
Witnessing strong momentum
A good 10.5% growth in the revenue shows that Domino’s has definitely got some steam. The momentum that it is witnessing around its sales will surely help it to gain much market share in the future. In fact, Domino’s share rose by 2.68% after it posted strong results and sales growth in the third quarter. This indicates that the investors are optimistic about its growth and can invest more in the coming quarters.
The company is now laser focusing on improving its same store sales and for this it is focusing on certain key aspects that will help it in the smoother flow. Under this strategy, Domino’s is promoting its new speciality chicken that it launched in the second quarter and is pleased to see the traction it is receiving in the market. As chicken is sold as a side item with its pizzas, Domino’s is ramping up its advertising strategies. Domino’s is expecting these strategies to be effective and will help the company to attract many new customers which will further help it to increase ticket.
Smart investments
Moving on, Domino’s is looking to drive its digital order books as the company has found that the digital orders are slightly higher than the traditional phone orders. In addition, Domino’s also has an expansion strategy under which it has opened 77 stores in the last 12 months and is further planning to increase its store count. On the international front, Domino’s is pleased with the robust returns it is seeing.
To further explore these opportunities, the company is now investing in the international markets. International franchises are also moving on well with good growth across sales channels. As company is investing in improving the digital ordering, Domino’s is expecting strong growth in the digital ordering in international markets which will further help to propel sales. It is pleased with the growth in the regions such as India, Turkey, Japan and the U.K. It has recently stretched its foot print in Norway where it opened two stores and now is expecting better results from them, too.
Conclusion
With trailing P/E of 35.28 the stock looks slightly overvalued but considering a good forward P/E of 29.05, the stock can be a good investment prospect at these valuation levels as well. Even its long-term prospects look concrete as its earnings are growing at a CAGR of 15.35% as compared to industry average of 14.35%. Also, the 83rd time of quarterly growth and revenue improvement indicates that the company definitely has a long way to go. Domino’s Pizza is a good pick as of now.
