Domino’s Pizza, Inc. (DPZ), Papa John’s Int’l, Inc. (PZZA) & Yum! Brands, Inc. (YUM): Three Stocks For Pizza Lovers

Note: This article has been amended to include Domino’s recently initiated dividend.

Pizza is big business, and it’s easy to understand why. The economics of the pizza business are extremely favorable. Not surprisingly, there are some highly profitable stocks engaged in pizza that have served both their investors and customers well over the past several years.

For investors with a taste for pizza and a fondness for market-trouncing returns, here’s three stocks you should get to know.

Great pizza with extra profits

Two pizza stocks on fire in recent quarters are Domino’s Pizza, Inc. (NYSE:DPZ) and Papa John’s Int’l, Inc. (NASDAQ:PZZA).

Papa John’s has seen financial results that are tough to beat. The company recently announced 6% same-store sales growth and 23% diluted earnings per share growth in the first quarter.

In addition, the company upped its 2013 earnings guidance, from a previous range of $2.85 per diluted share to $2.95 per diluted share, to its current expectation of $2.90 per diluted share to $3.00 per diluted share.

Papa John’s Int’l, Inc. (NASDAQ:PZZA) success has not been lost on investors. The stock has ballooned to a $1.5 billion valuation, after rising more than 80% just since the start of 2012.

As a testament to the powerful economics of the pizza business, Domino’s Pizza, Inc. (NYSE:DPZ) hasn’t lagged far behind. Domino’ is a bigger industry player than Papa John’s Int’l, Inc. (NASDAQ:PZZA), holding a $3.5 billion market value after rising 85% since the beginning of 2012.

Domino’s underlying results have been equally impressive as Papa John’s. Recently, Domino’s Pizza, Inc. (NYSE:DPZ) reported first-quarter profit that was up 25% from the previous year’s adjusted EPS. This growth was due largely to strong domestic same-store sales growth of more than 6% year over year.

Domino’s is executing particularly strongly in the emerging markets, where the biggest growth opportunity presents itself for pizza stocks. The company’s international division outperformed, posting 6.5% same-store sales growth in the quarter, amounting to the 77^th consecutive quarter of international same-store sales growth.

Don’t forget the industry juggernaut

Of course, the behemoth of the pizza business continues to be Pizza Hut, which is owned and operated by Yum! Brands, Inc. (NYSE:YUM). Yum! holds the Pizza Hut chain in addition to Taco Bell and KFC, and has actually underperformed its smaller rivals.

Yum! shares have stagnated over the past year on continued worries pertaining to the safety of its KFC product offerings. Very recently, Yum! Brands, Inc. (NYSE:YUM) reported a 16% drop in second-quarter EPS, due largely to the aforementioned problems.