저자: 진행자 · 외국인
요약 보기
도미노피자(DPZ)는 프랜차이즈 기반 자산경량 모델로 매출·이익 성장과 배당 성장이 높고, 자사주 매입으로 주주수익률(shareholder yield)이 큼. 최근 워런 버핏이 지분을 처음 매수한 점이 부각됨. 2024 가이던스는 영업이익 8% 성장으로 하방선이며 실제 성장은 더 높을 수 있다고 봄. 부채비율은 높지만 이자보상배율이 4~4.5배로 상환 여력 충분. 선행 PER 26.67은 높지만 역사적 평균보다 낮아 저평가 해석 가능. 보글식 밸류에이션으로 최악 가정에서도 연 9.8% 기대수익률 제시.
다듬은 글
Domino's Pizza stock ticker dpz is currently trading at $453 per share and this is a stock that I actually own in my personal portfolio and I've own it for a while now if we look at my growth chart we can see Domino's Pizza right here I'm currently up close to around 40% on this position now what's interesting is if you look at the past year they're up around 22.7% we can see there's a huge selloff they're trading as highs about $533 per share and then sold all the way down to around $44 per share now to put this into context over the past decade Domino's Pizza has way outperform the market by a large amount what's even more interesting is it recently came out that last quarter Warren Buffett added shares for the first time of Domino's Pizza to his portfolio and the market reacted accordingly when they found out this news if we look at the past month we can see Domino's Pizza currently up around 5.77% now this addition to war Buffett's portfolio was a small one he added around 1.28 million shares and we can see it's estimated that his average Buy price after adding shares somewhere in this range is around $430 5 per share so we can see stock is currently a little bit above his estimated average Buy price so we have a lot to dig into we're going to look at the recent earnings report be analyzing the valuation for this company and deciding if it's a good stock for us to consider adding shares of to our portfolio so let's go ahead and start digging into it now like I just mentioned they recently released their latest quarters earnings Q3 not too long ago in early October Q3 Gap earnings per share came in at $419 which was a Beat by about 55 so that's a pretty big beat Revenue came in at about 1.08 billion which was up close to around 5% year-over-year but did Miss Expectations by about 20 million now there's a lot more to break down from this earners report but again I want to step back and help you better understand what Domino's looks like from a dividend perspective so if we go ahead and jump over to my dividend breakdown sheet let's go ahead and come up here and plug in dpz and like always if you talk about and then now if we come down here we can see Domino's Pizza has a lower starting dividend yield sitting at about 1.33% with the dividend growth over the past decade has been mind-blowing look at this a 10-year dividend kager of 20% a 5-year dividend kager of 18.36% so when we look at this charted out we can see explosive dividend growth we're talking about a company that went from 80 cents per share in dividends in 2013 all the way up to $484 in 2023 and we're now sitting at $64 so the dividend growth is pretty mind-blowing your yield on cost if you what about a decade ago would be far higher than the starting dividend yield but here's what's really beautiful about this whenever we see high levels of dividend growth if we see the payout ratio remain low that's a very good sign and we can see that has been the case for dominoes despite increasing their dividend at nearly a 20% rate over the past decade their free cash flow payout ratio has remained in a very healthy range and the free cash flow has been growing we can see free cash flow in 2013 sitting at about 153 million and in 2023 all the way up to 400 1885 million so from a dividend perspective things look really good here everything looks very healthy the dividend is not only sustainable but they should be able to continue to grow it at a very high rate but one of the things we also have to understand about dominoes they're not just a dividend payer they're what I would call a true shareholder yield company now what does that mean well again we have to remember there's five different things a company can do with their free cash flow they can reinvest back into the business attempt mergers and Acquisitions pay down debt or they can buy back shares and pay out dividends and these two options are ways to directly word shareholders so yes they're paying out dividends but again I call them a shareholder yield company meaning they're also buying back a lot of shares so if we jump over to my stock screener tab let's come up here and plug in dpz again thanks to Ticker data this will automatically load in and if we come down we can see the company's gone from around 55.7 million shares outstanding in 2013 to the end of 2023 just 35 million so this is a significant amount of share reduction during this time period and to put this into perspective if we look at the profitability sheet and look at dominance we can see the 10e net income kager sitting about 13.76% but actually if we jump over to bogle's valuation which we're going to look at here just a little bit more in depth and plug-in Domino's Pizza if we look at the 10year earnings per share growth it's closer to 20% so why is the EPS compounded annual growth rate so much higher than just net income again it's because the company's bought back so many shares outstanding anytime a company is constantly buying back shares you have to remember it's going to boost all other per share metrics so things like earnings per share Revenue per share and free cash flow per share are all going to be higher on a per share basis because the company is buying back shares so this can be a really great way to reward shareholders when it's done properly and again this is why I call dominoes a shareholder yield company not only are you getting rewarded with dividends but also with buying back shares and we'll come back and talk about that more here in just a little bit but if we go ahead and jump back over to this earnings report let's start to break this down just a little bit more if we start to scroll down there's a couple of different things that I want to point out first of all zoom in here we can see Revenue increased to around 52.8 million which is around a 5.1 increase in the third quarter compared to the third quarter of 2023 so not necessarily a high Revenue growth rate but we'll keep that in mind we can see us company-owned store gross margins increased by about 1 percentage point in the third quarter of 2024 compared to the third quarter of 2023 okay let's talk about gross profit margins for a second again if we jump back over to the stock screener and go over to our profitability sheet we can see one of the things that Dominos has done over the past decade is their gross profit margins have been increasing just like we saw in the most recent quarter in 20 13 gross profit ratio is sitting about 30.4 6 and if we look at where it is the end of 2023 sitting about 38.5 so over just a decade time period it's a pretty nice increase in the gross profit ratio look at the 10-e average 34.75 and last year 38.5 that can really make a difference on the bottom line so that's a good sign now if we go ahead and jump back over to our earnings presentation we can see net income actually decreased by about 0.8 million or 0.5% in the third quarter of 2024 as compared to the Third quar of 2023 due to higher provision for income taxes and one of the main reasons for this was this was driven by lower foreign tax credits so yes net income did drop slightly but keep in mind Revenue was growing income from operations was technically growing at about 5% bottom line just dropped a little bit because of tax reasons now if we keep scrolling down a couple more things that I do want to point out we already talked about the dividend yes the company's paying dividends and growing at a high rate and then they're also buying back shares and if we zoom in here we can actually see something interesting 2024 guidance the company now expects the following given the challenging macroeconomic environment and its impact on current business Trends across the globe approximately 6% annual Global retail sales growth and approximately 8% annual income from operations growth so after looking at these other growth rates that we've already seen double- digit Revenue growth and net income growth is all of this starting to slow down is Domino's Pizza not going to be the same stock as it was over the past decade well here's what we have to understand if we take a step back for a moment let's look at the industry that they're in as a whole the Pizza Market we can see it's estimated from 2024 to 2032 the compounded annual growth rate for the global Pizza Market is expected to be around 11% so this is a quick growing Market it's projected to have a lot of growth over the next decade and Domino's Pizza is probably in a better position than anyone to capitalize off this growth now one of the things we also have to understand is when we look at this they're projecting long-term guidance of about 7% annual Global retail sales growth and 8% annual income from operations growth yes that is is good but look what's pointed out in their investors presentation if we zoom in look right in this area right here our operating income will grow at 8% meaning we intend to grow profits faster than sales as with sales and stores the Plus on our 5-year profit Outlook means 8% represents what we see as our floor so that 8% is on the low end of their expectations that's what a lot of people are missing right now so in reality growth could be much higher than just 7 to 8% when it comes to sales and profit now let's take a moment and actually talk about one of the concern concerns a lot of people have with dominoes and I've mentioned this before on the channel if we jump over to the balance sheet breakdown come up here and plug in dpz here's what scares a lot of investors look at total assets we're sitting at about 1.77 5 billion but look at total debt 5.2 billion giving them a debt to assets ratio of 2.93 that's a really high debt to assets ratio and we can see historically speaking they've typically had a pretty high debt to assets ratio so how concerned should we be about this and here's what we have to understand this has to be in context yes this is undoubtedly a high debt to assets ratio so to put this into context we need to look at the interest coverage ratio now what is this telling us well this is a metric that measures a company's ability to meet its interest payment obligations so how easily can they make the interest payments on this long-term debt and it's calculated by dividing a company's earnings before interest in taxes which is ebit by its interest expenses and generally speaking for companies like dominoes you'd want to see the interest coverage ratio be at least around 2.5 or 3 or above and we can see over the past few years it's easily been meeting that interest coverage ratio we were sitting at about 4 here in 2022 and over the past couple of years it's actually increased closer to around 4.5 so is there a lot of longterm debt yes could that potentially be a problem absolutely debt always increases a company's risk but what we've seen from dominoes historically and as of right now is they have been in a healthy position to make those interest payments something else we have to talk about to put this into context is is actually a very asset likee business which is not what you would expect at first Domino's Pizza has a franchise business model and 99% of their stores are franchised so Domino's revenues are actually primarily generated by royalties and fees that the business owners pay to the parent company and what this allows is for dominoes to rapidly expand and it also makes their business very asset light so in reality total assets being way lower than total debt has actually been one of the keys for Domino's being able to grow at such a rapid rate over the past decade and again from a debt perspective if we look at the short-term current ratio over time they're actually in a pretty healthy position so they don't have to worry about meeting short-term obligations yes long-term debt is large but again the interest coverage ratio over the past decade has proven that they can easily make those interest payments so what initially appears to be a weakness for dominoes in reality has actually been somewhat of a strength for them over the past decade so it's easy to see why Domino's is an attractive stock for a lot of reasons and why it's done so well over the past decade but here's one of the main problems a lot of people have with Domino's right now look at this forward price to earnings it's sitting at about 26.67 that's relatively high and it's obviously a lot higher than most of Domino's peers so most people would argue this stock does look a little bit expensive at its current prices but I want to take a step back and look at this from a unique valuation perspective and look at it from bogle's valuation now I haven't used this a lot on the channel before but I have done it a few times but I think it makes a lot of sense to look at Domino's through this lens in the scenario and I'm going to show you why as I go through this now I've already plugged in dominoes right here and we can see when it comes to valuation there's three different things that we're going to look at and this is what drives shareholder returns over the long term we have earnings growth obviously when a company grows earnings the intrinsic value grows we have shareholder yield which like we talked about earlier combines dividend yield and buyback yield to get a realistic view of how much you're being returned to as a shareholder and then we have multiple expansion and all multiple expansion is telling us is how much someone is willing to pay for Dominoes on a per share basis again so we can see price to earnings multiple right now is sitting about 26.67 so right now people are willing to pay $26.67 for each dollar of earnings for dominoes but if this went down longterm that would mean they're seeing multiple contraction and if it went up long term it means they're seeing multiple expansion and typically this is going to be determined by things like the quality of a company or the predictability improving so if we jump back over to boal's valuation again let's look at each of these three things what we've already been told by management is on the lowend we can expect earnings growth of around 8% over the next few years so let's just go with 8% even though they're saying that's on the low end so we're talking about kind of a worst case scenario for dominoes I'll hit enter and then we have shareholder yield if we come over here we can already see the starting dividend yield for dominoes is sitting at about 1.33% but then we have buyback yield which if we come down here we can see each year what percentage of shares they're constantly buying back so in 2019 they bought back around 2.6% of shares outstanding 2020 4.4 2021 4.56 and 2022 3.96 and 2023 a little bit less at about 1.8 so the average buyback yield for this company over the past P 5 years is sitting at about 3.5% so again buying back a lot of shares over the past few years so let's just assume again it's going to be on the lower end we're going to go with a worst case scenario maybe it's sitting at about 2.5 over the next decade on an average basis we plug that in you can see we get a shareholder yield of about 3.83% so so far with earnings growth and shareholder yield we can get an average annual return over the next decade of around 11.83% but now we have to address multiple expansions again in this scenario we're assuming a worst case scenario so what could be the worst thing to happen to Dominoes well maybe their price to earnings multiple that the market values them at continues to contract so let's say over the next decade their price to earnings multiple Falls by 20% Which would be around 2% on an annual basis so if we come over here we can come up here and do minus 2 which again would be 2% on an annual basis over the next decade so with earnings growth shareholder yield and even a negative multiple expansion you can see with dominoes over the next decade we're getting an expected annual return of 9.83% and in a lot of these cases it's assuming a worst case scenario So based off this valuation you can quickly see why a lot of people like Buffett himself do like Domino's Pizza right now especially when Domino's has position themselves as one of the leaders in the Pizza Market a market that's expected to grow at a compounded annual growth rate of close to 11% through 2032 and over the past year we have seen Domino start to make moves to continue to position themselves to benefit from this growth we can see they partner with Microsoft for AI purposes if we come down here we can get a quick snapshot of what this looks like this is expected to transform Domino's consumer experiences by enhancing the ordering process through personalization and simplification so again that goes back to cost savings which again would also improve the gross margins which they've already been benefiting from over the past decade so I've been bullish on dominoes for a while now I've held them in my portfolio for a while and I've definitely raped the benefits again I'm currently up around 40% on this position and when I look at the moves they're making the way they're currently positioned in the market the expected growth in their Market market and I look at things like bogle's valuation I continue to be confident in this company especially when you look at them from a long-term perspective again when I look at that price to earnings multiple yes a lot of people will point out it's kind of high for a pizza company but even if you look at it from a historical perspective you can see they're actually below their average 5year price to earnings multiple right now so compared to how they've historically traded you would actually argue that they're undervalued but again even in a case where we see over the next decade that price to earnings multiple dropped by 20% we're still looking at an expected return of close to 10% and that's annually so go ahead let me know what you think of Domino's Pizza in the comments down below if you plan on buying just like Warren Buffett is or if you plan on staying away and like always if you'd like be able then
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